Posted
Status Quo Status Quo Status Quo Status Quo Status Quo....
With weakness in stocks holding through the day, TSY buyers pushed futures prices all the way back to pre-NFP levels. After all that hullabaloo on Friday...the Sept 10yr contract has found STATUS QUO at 115-20...
This has helped "rate sheet influential" MBS prices fully recover as well....prompting a few lenders to pass along better rate sheets (relative to where they were on Friday). Unfortunately as we alerted earlier...activity has been slow in the MBS and TSY market....so dont get too comfortable with any of these gains just yet...we need some follow through and a little volume to start spunking up our outlook.
Illustrating FN 4.5 STATUS QUO ....
Profit taking brought about weakness in equities today (anyone
watch the Baltic Dry index ?)....plus the move lower in rates was done so in a thinly traded market.
MY POINT.
With the Fed not expected to offer up any tapebombs and stocks leading TSY prices higher....today was simply a return to status quo, a mini correction of TSYs being oversold. That said...DONT GET COMFORTABLE WITH THESE GAINS yet....we still have $75 billion in auctions to go this week, stay defensive. Sorry...I feel the need to reiterate that because FLOATING REMAINS SUPER RISKY as 4.00% on the 10yr is still quite viable.
In all reality your rate sheets dont even reflect today's recovery rally...so I am sure you are scratching your head, waiting for your market (mortgage rates) to catch up. Do we agree on that?
2s vs. 5s: 150bps
2s vs. 10s: 254bps
5s vs. 10s: 103bps
MBS, TSY, LIBOR QUOTES
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