MBS
-Prices Higher Yesterday. Some lenders repriced for the better. Not the broad majority.
-Trading volume very low
-Yield Spreads Wider vs. 5 yr note. Tighter vs. 10 yr
-Most accounts moved "up in coupon"
-Fed supports originator selling of $2-3bn MBS
-So far ths morning prices led lower by TSY selling (contained by range)
-Yield spreads tighter as MBS outperforms yield curve. That is good thing!
-FN 4.5 staying close to 100-00. FN 5.0 staying close to 102-00.
-MBS nervous of yield curve steepening (negative convexity...which is why prices have been capped near 100-00 and 102-00)
TSYs
- At US close yesterday 2 year TSY yields fell over 4 bps to 0.93% while 10 year TSY yields rose almost a bp to just under 3.50%.
-Overnight trading very quiet.
-At domestic open, prices weaker ahead of auctions.
-Treasury to auction 35bn 3 yr notes at 1pm
-2 yr note currently -0-01 yielding 0.96%
-10 yr note currently -0-07 yielding 3.53%
-Need to see continued "buying on dips" to support overall bullish sentiment. Look for 10 yr to trade between 3.45% and 3.55%
-California a concern
Stocks
-Dow closed up 44.13 points (+0.53%) at 8,324.87.
-S&P closed up 2.30 (+0.26%) at 898.72
-NASDAQ closed down 9.12 points (-0.51%) at 1,787.40.
-Overseas the Nikkei and Hang Seng moved lower
-European stocks trading higher
-Futures indicate stocks will move lower at the open, however it should be noted that futures are improving as oil prices recovery
Commodities
-NYMEX Crude currently at $64.48 after reaching overnight low of $64.25. As oil prices recover, stock futures have ticked up.
-Gold at $928.95 after reaching overnight low of $921.10
Currencies
-EUR/USD: 1.4015 after hitting 1.3902 overnight
3 Month LIBOR hit a fresh record low....
LIBOR FIXINGS
O/N LIBOR: -0.0019 to 0.2587 from 0.2606
1 MONTH: +0.0000 to 0.3019 from 0.3019
3 MONTH: -0.0106 to 0.5375 from 0.5481
6 MONTH: -0.0087 to 1.0225 from 1.0313
1 YEAR: -0.0025 to 1.5113 from 1.5137
7/6 EFFECTIVE FED FUNDS: +0.02 to 0.18 from 0.16
MBS Market Alerts
