Much of the volatility in late April and early May has been frustratingly opaque in terms of traditional cause and effect relationships.  We were forced to resort to discussing things like tradeflow momentum and corporate issuance to explain movement.  While these two esoteric factors are always in play to some extent, it's much easier to accept them when they're pushing in the same direction as the economic data.  That was the case today.

In terms of the aforementioned esoteric stuff, we had positive tradeflow momentum right off the bat in the overnight session.  US Treasuries stayed green, defying European bond market momentum which carried German Bunds into negative territory just after 5am.  Whereas European bonds would never make it back into positive territory, Treasuries bounced in order to remain in positive territory this morning.  MBS generally went through the same motions, but underperformed Treasuries most of the day.

The data-based justification for the rally came in the form of weaker-than-expected Philly Fed and Existing Home Sales at 10am.  Bond markets made it a point to not break back above yields in place at the time of those data releases (another promising sign).  After the 1pm TIPS auction, the last leg of the rally came quickly.  As I discussed in an update on MBS Live, it wasn't necessarily because of the stats of the auction, but rather the auctions role as precursor for afternoon liquidity.  In simple terms, traders had to wait for TIPS to pass (primary dealers are required to bid) and then were more free to do what they wanted.  For many, that was the opportunity to make the last trades of the week as absences will drastically increase for tomorrow's half day.


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
101-00 : +0-11
FNMA 3.5
104-07 : +0-07
FNMA 4.0
106-20 : +0-04
Treasuries
2 YR
0.5770 : -0.0161
10 YR
2.1920 : -0.0650
30 YR
2.9890 : -0.0690
Pricing as of 5/21/15 4:59PMEST

Today's Reprice Alerts and Updates
A recap of Alerts and Updates provided to MBS Live subscribers.
2:06PM  :  Hurray for TIPS?
10:10AM  :  US Bond Markets Outperforming Europe; Second Wind After 10am Data

MBS Live Chat Highlights
A recap of featured comments from the Live Discussion on the MBS Live Dashboard.
Victor Burek  :  "3 day weekend coming up..not surprised"
Matthew Graham  :  "Not seeing too much love on rate sheets. Averaging less than an eighth vs y'day."
Barry Moore  :  "HP---If the mortgage being delivered to Fannie Mae is secured by the borrower’s principal residence, there are no limitations on the number of properties that the borrower can currently be financing. If the mortgage is secured by a second home or an investment property, the borrower may own or be obligated on up to ten financed properties (including his or her principal residence)."
Hugh W. Page  :  "Anyone remember off the top of their head what Agency Guidelines are regarding max number of financed properties. Is it 10 not including Primary? Can't remember and I'm avoiding AllRegs :)"
Matt Hodges  :  "go to hud.gov and search "multiple FHA mortgages""
Matt Hodges  :  "yes, vacating a jointly owned property is the 4th"
Thurman Killen  :  "Anything outside of that?"
Matt Hodges  :  "non occ CB"
Thurman Killen  :  "in what circumstances can someone get a 2nd FHA loan if it's not for relocation or increase in family size?"
Sung Kim  :  "yes"
Dustin McAlister  :  "can someone who has 2 fha loans in his name be a non-occ CB on another FHA loan?"