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Do you expect the home buyer tax credit extension to contribute to a noticeable pick up in loan production?

Created By: Adam Quinones
  • Yes, I anticipate an increase in activity (27.1%)
  • Only a modest upturn in production (44.2%)
  • Nope. 2009 demand stole from 2010 demand (28.7%)

Federal Reserve MBS Purchase Program





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MBS OPEN: PM Selling Carries Over From Yesterday
by Matthew Graham
Posted
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Yesterday's Recap

- Higher Volume Yesterday As MBS Rallied in the AM and Sold In PM

- MBS Selling = profit taking, "snowball," tsy supply rings doorbell

- White House to be Risk Manager In Chief

-Fed said to be "on hold" through 2009 and possibly 2010.

-18 banks downgraded by S&P

- US CPI  +0.1% vs. expected +0.3%, YoY -1.3%, largest year over year drop since 1950

-US Q1 Current Account -$101.5bn vs. -$154bn (revised from-$132.8bn)

-US May Oil Demand -4.3%, Gasoline demand +0.6%

-US dollar fell. EUR/USD pair traded to 1.3984

-Gold closed at 938

-NYMEX Crude closed at 71.03

- If you read nothing else this AM, Read AQ's Close Again!!!

The AM So Far...

- Ugly

- Jobless Claims moderate as continuing claims change course.  Happy B-day to recovery optimists.

- Philly Fed and LEI to come.

- Geithner on Financial Reform at 930

- Just fell into "MBS Underworld" after hanging on to "The desert" yesterday

- Welcome to 2008 Style Volatility!  (is this why it feels like everyone and their brother has suddenly been discussing swaption straddles and strangles?)

- Help may have to wait until FOMC speak soothes

Charts

MBS QUOTES

6/12 EFFECTIVE FED FUNDS:   +0.02  to  0.24 from 0.22

LIBOR FIXINGS

O/N LIBOR:      +0.0025   to  0.2637   from  0.2612

1 MONTH:       +0.0019    to  0.3150   from  0.3131

3 MONTH:       -0.0013     to  0.6087   from  0.6100

6 MONTH:       +0.0037    to  1.1612   from  1.1575

1 YEAR:            -0.0050     to  1.6888   from  1.6938

Data provided by Thomson Reuters
Secondary Marketing Managers and Capital Markets Desks, if you are interested in subscribing to the same fixed income and mortgage market data we use:CLICK HERE.

More from MND

Comments

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John Balmer  |  Contact or Connect with this Member
on
Thought I just said this! Unfortunately we are dealing with the supply of the bonds the govt. is selling, which is driving their yields up. Sure there has been a recent run of "better than the worst we have seen" economic reports, but supply is being used by bond purchasers as fuel to keep the yields high! Inflation concerns were shot in the arm with a bazooka yesterday, but the 10 year yield is higher right now in anticpation of the sales next week. We are in a bad spot gang, any "it was not as bad as the worst" economic news moves yields higher, so unless a catastrophic run of economic news comes out, OR the feds. unleash their own tape bomb, we are fighting a tough fight for MBS and lower rates. Come on the unemployment figures were over 600k for the 20th consecutive week, but as the idiot on Bloomberg said this morning, at least the 4 week moving average is getting lower! Makes me feel much better about going all in and losing, but finding a penny in my couch when I got home!
Paul Carlin  |  Contact or Connect with this Member
on
I had a dream last night, The bond market came to be and said "I fell like I have Bipolar disorder. One day I will wake up excited, just to watch my excitement turn to fear and confusion. Other days, all I can see is all the people who are out to get me. I can never feel just normal."
Mike King  |  Contact or Connect with this Member
on
John, good points. Its ridiculous the spin they are trying to put on the 4 week average moving lower. Of course it is, those peoples claims have run out so they are no longer counted in the number. It doesn't mean they found a job again. I can't believe some of the bs I have heard this year.
Adam Quinones  |  Contact or Connect with this Member
on
haha...Michael is going through volatility exhaustion I think
Craig LaBruno  |  Contact or Connect with this Member
on
I can't take the swings anymore. It's like my happiness as of late is the direct result of how MBS's were traded for the day. I have all theses cleared to close loans that I took before Black Wednesday that I'm beginning to think I will never close. It's like I worked for free for the most part in May. Don't you just love this job?
jdeyber  |  Contact or Connect with this Member
on
Great closing post from yesterday AQ. Maybe not as nice as the bedtime story MG built the other day, but not all bedtime stories are happy ones I guess. Also, Ray made some really good points in his comments to follow. The "Grab" of private industry by the government is a very scary concept and the data releases as they are get spinned by the media to allow people like George Soros to continue to drain money from the economy while the world sufocates. I noticed something interesting with the NFP report from the 5th...even when they spin the 345K losses in jobs for May to be great news, that monthly figure was higher than any month during either of the last 3 recessions this country went through. How in the world does any clear thinking economist or trader consider that anything but BAD news? Boggles the mind.
Michael Gannon  |  Contact or Connect with this Member
on
like i said before....stupid
Adam Quinones  |  Contact or Connect with this Member
on
locate the trends and take your profits before someone else snatches them up jdeyber...money still has to be made regardless of current economic discussions and outlooks.
John Balmer  |  Contact or Connect with this Member
on
AQ, "Crack Wednesday" took most of our profits, and those of our customers who are now waiting for the rates that were there for months and gone in a couple days! How about a grandfather clause for apps. that were in the system and then we can all focus on new business - kidding of course!
Molly Dean  |  Contact or Connect with this Member
on
I am just shocked at how quickly all the rally gains disappear! UGH!
jeff billups  |  Contact or Connect with this Member
on
1.4% worse in yield spread from my best lender. I understand taking prodfits but this makes no sense. Are the "it could be worse" reports really driving these increases? Find it hard to understand how these reports are being spun as positive.
David Friedman  |  Contact or Connect with this Member
on
Why, why, why, why, why, why, why, why, why, why, why, why, why, why, why, why, why?
Adam Dahill  |  Contact or Connect with this Member
on
Locked in a nice 729k loan yesterday. It was a purchase and I told him better to lock since he is closing in 20 days and if rates drop then we can worry about floating down but better to be safe than sorry. I called a lot of clients when it started turning and most are still holding out. They think there is something magical about 4.875%. I think we will head lower still but this up and down is getting relentless.
David Haines  |  Contact or Connect with this Member
on
I locked two yesterday but still have a 4 or 5 riding out the storm. I foresee the FOMC riding to rescue next week.
Brian Denton  |  Contact or Connect with this Member
on
It was an interesting shape to the 10-year yesterday with a double bottom at 3.58 (just below 3.64 where AQ said the floor was). I'm going to remember that formation next time it looks like a trend is running out of steam. Can go the other way with double tops as well. http://finance.yahoo.com/echarts?s=%5ETNX#symbol=%5ETNX;range=5d
Adam Janik  |  Contact or Connect with this Member
on
I think people are so tired of a bad economy that they are looking for the silver lining no matter how bad the storm cloud looks. I guess even storm clouds can look like cartoon characters or animals if they are stared at long enough.
Bobby Downey  |  Contact or Connect with this Member
on
Man it is brutal today and getting worse....I long for the day when i get the float boat emptied and can go back to just selling what that day's rate is....TSY are taking a beating today.....MBS following suit.....it just baffles me how we can lose a weeks worht of gains in a day....I wish they would improve that fast.....
Nate Miller  |  Contact or Connect with this Member
on
Ahh, I remember when the 10-yr was at 3.58 just like it was yesterday...wait that was yesterday...doh!
Scott Westemeyer  |  Contact or Connect with this Member
on
Adam D, I agree with your point about the "magical" 4.875%, they seem to want to get under 5% no matter the risk of rates rising.
Adam Janik  |  Contact or Connect with this Member
on
I locked a couple yesterday but there is a part of the pipeline that wants those sub 5% rates without paying a lot to get them. Might be a long wait.
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