Posted
Treasuries and Stocks appear to have shown their hand for the day as the close of the stock market approaches. After 3 earnest attempts, the 10yr has been unwilling to break above 3.88 and shortly thereafter the S&P made a decided turn at 1017, currently trading at 1011. In comparison to the early morning cliff-jumping, the afternoon looks downright sideways, and anything but weaker for tsy's. This has allowed MBS since 10:30 to stage a slow, steady rally. At this point actually, a full half point of this AM's losses have been recovered with the current 4.5 down only 12 ticks versus lows from 830 and 1030 AM of 99-09 which was 24 ticks down.
Known and potential reasons for this are severalfold. First of all, there is the logical correction of the initial rapid response that tends to follow most drastically worse or better than expected reads on economic indicators. To some extent, this is likely in play. Another common occurrence after such data is for the various truths behind some of the underlying numbers to emerge and mitigate some of the initial potency. As the more astute financial minds saw and commented on these truths, we who lie somewhere else in the spectrum slowly but surely began to perk up and either pay more attention to the smart dudes or discover similar truths of our own volition. The gains in MBS look more like a trickle of counterpoint to the economically bullish data whereas Stocks and Bonds look like a bit more of a debate with any perceived "trickles" only taking shape and even morphing into more voluminous types of water analogies in the later afternoon.
We'll touch on as many of these considerations as possible in the close today as well as link you to an in-the-works and in-depth look at today's employment situation. Of course one might expect to get some of our thoughts on what this means for the mortgage rate picture going foward especially as it concerns locking and floating. A fair expectation I'd say, but be warned, we may--as has been the case in the past--ask you to consider facts over opinion and apply some individuality to your lock/float stances...
For now, the combination of current momentum and the inherent qualities of a Friday afternoon probably put us beyond the risk of any reprices for the worse and indeed the more likely eventuality would be to see some late day reprices for the better here as lenders peel off a layer or two of the knee jerk hedging we saw in this AM's sheets...
MBS, Tsy, and LIBOR Quotes