After Thursday and Friday of last week mimicked the previous Thursday and Friday, it was fair to wonder if we'd get another ugly Monday today.  While we did lose ground in terms of trading levels, the severity of the weakness reveals several clues about trader sentiment.  Those clues point to an ongoing consolidation of the late-April / early-May sell-off.

Let's talk quickly about this term "consolidation."  Quite simply, it can be thought of as a period of time where trading levels are moving sideways or counter to the previous trend.  The days inside the consolidation can be volatile and varied.  The key feature is that it is neither extending the previous trend nor beginning a bounce back in the other direction.

So far, we're still in the midst of a consolidation.  We clearly aren't yet bouncing back from recent weakness, but neither are we stampeding toward the years worst levels. 

With a lack of volume and a big glut of corporate bond issuance, today's weakness may prove to be deceptive in terms of the amount of ground covered.  When bonds are as illiquid as they have been, unexpectedly high supply combined with low trading volumes makes for amplified movement.  And even then, trading levels remained in better shape than the first three days of last week.  This is a far cry from last Monday which closed at the highest yields of the year.


MBS Pricing Snapshot
Pricing shown below is delayed, please note the timestamp at the bottom. Real time pricing is available via MBS Live.
MBS
FNMA 3.0
100-25 : -0-16
FNMA 3.5
104-02 : -0-13
FNMA 4.0
106-17 : -0-09
Treasuries
2 YR
0.5770 : +0.0367
10 YR
2.2340 : +0.0863
30 YR
3.0290 : +0.0936
Pricing as of 5/18/15 5:15PMEST

Today's Reprice Alerts and Updates
A recap of Alerts and Updates provided to MBS Live subscribers.
2:01PM  :  ALERT ISSUED: Negative Reprices Increasingly Likely
11:03AM  :  ALERT ISSUED: Treasury Breakdown Continues; Reprice Risk Materializing
10:52AM  :  ALERT ISSUED: Teetering on Edge of Reprice Risk
9:19AM  :  Lowest Recent Rates + FOMC and 3-Day Weekend = Corporate Debt Bomb

MBS Live Chat Highlights
A recap of featured comments from the Live Discussion on the MBS Live Dashboard.
Ted Rood  :  "4, deny......"
Matt Davidson  :  "Does anyone know what the new waiting period for Fannie and Freddie are with short sales and BK's....is it four years or two years....I just read where they followed FHA's lead in lowering to two years.....Can anyone confirm or deny this. Thank you"
Matt Hodges  :  "many lenders overlay to 70% min. o/o concentration"
Clayton Sandy  :  "51% needs to be owner-occ"
Clayton Sandy  :  "49%"
Tim Robinson  :  "What is the max investor concentration in a condo project for a non owner purchase? 60% seems to come to mind"
Ben Biscoe  :  "frank see page 6 http://mndne.ws/1EsM9Hn"
Frank Hanna  :  "FHA refi, you can still get an MIP refund right? it doesn't have to be a streamline right?"