MBS Commentary

MBS RECAP: 2/13/2012

Matthew Graham — Mon, 13 Feb 2012 21:24:42 GMT

MBS Live: MBS RECAP

Open MBS Live Dashboard

FNMA 3.5
103-17 : +0-03

FNMA 4.0
105-10 : +0-02

FNMA 4.5
106-21 : +0-01

FNMA 5.0
108-01 : +0-02

GNMA 3.5
105-04 : +0-05

GNMA 4.0
107-25 : +0-04

GNMA 4.5
109-08 : +0-02

GNMA 5.0
111-02 : +0-02

FHLMC 3.5
103-08 : +0-04

FHLMC 4.0
104-30 : +0-02

FHLMC 4.5
106-06 : +0-03

FHLMC 5.0
107-23 : +0-01

Pricing as of 4:03 PM EST

Afternoon Market Updates

A recap of MBS Market Updates provided by MND Analysts and streamed live to the MBS Live Dashboard.

2:54PM : Fed Releases Orders Related to Banks in Mortgage Settlement

The Federal Reserve Board on Monday released the orders related to the previously announced monetary sanctions against five banking organizations for unsafe and unsound processes and practices in residential mortgage loan servicing and processing. The Board reached an agreement in principle with these organizations for monetary sanctions totaling $766.5 million on February 9, 2012.

1:52PM : ALERT: Treasuries Turn Negative in Light Volume, MBS Follow But Outperforming

If it weren't for the rather abrupt directional jolts in Treasuries since 11am, we'd say that 10yr yields are trading "aimlessly" higher. Indeed, volume is low, and one has to seek out market moving motivation (as opposed to being uncontrollably confronted with it), but a 1.96 to 2.0 move in the space of a few hours is perhaps too aggressive to be considered aimless. Aimlessly aggressive, perhaps?

With the relatively important Retail Sales report out tomorrow, as well as several other pieces of economic data, combined with the striking absence of any Greek headlines is creating the impression that the 2nd half of today's domestic session may stand out as the last period of relative calm between now and Wednesday's sure-to-be-riveting Eurogroup meeting. Some accounts could be setting up defensively for those upcoming events, but yields got some support after running to 2.0 and are currently at 1.9931.

Treasury volatility notwithstanding, MBS continue to be a bit more even-keeled, still in positive territory on the day, up one tick at 103-15. We got one report of a positive reprice earlier, but it was justified given that the lender in question priced early, and was lagging well behind its normal cohort in terms of pricing competitiveness. Reprices are less likely after the current bit of weakness. And if things got any weaker, there could even be a small chance of negative reprices, though neither are especially likely given the current range.

Featured Market Discussion

A recap of the featured comments from the Live Discussion on the MBS Live Dashboard.

Jeff Anderson : "REPRICE: 3:23 PM - Chase Better"

Eric Franson : "Not much. Around 15 bps."

Matt Hodges : "how much improvement?"

Eric Franson : "REPRICE: 12:56 PM - Wells Fargo Better"

Ira Selwin : "more money, less loans to get that money from"

Kent Mikkola #353976 : "those fee increases will drive more credit worthy borrowers to conventional loans with MI and they will be left with riskier loans"

Matt Hodges : "wrong approach to increase revenue"

Gaius Rossini : ""In October 2010, FHA increased its annual premium by 0.25 percentage points and in April 2011 implemented another increase of this same size. The Temporary Payroll Tax Cut Continuation Act of 2011 (H.R. 3630) mandated a further increase in FHA's annual insurance premiums. In accordance with this legislation, FHA will soon implement a 0.1 percentage point increase to annual premiums for single family forward mortgages. Loans over $625,500 will pay an additional 0.25 percentage point annual prem"

Gaius Rossini : ""The Budget includes the recently enacted increases in FHA premium levels. These will boost FHA’s capital reserves — to better protect taxpayers against the risk of credit losses by the program — and increase Federal revenues""

Matthew Graham : "and I'm sure the White House would greatly prefer NOT to keep rates low, as a necessary precursor to such a thing even happening would be a much stronger economy in an environment with greatly diminished European risks. In other words, higher rates would mean serious sunshine and lollipops had cropped up somewhere"

Scott Valins : "i guess WH has to be optimistic of growth and recovery which would naturally lead TSYs higher"

Matthew Graham : "traders aren't going to trade White House estimates"

Scott Valins : "wow 2.8 in 2012 - what's behind that estimate? Don't they want to keep rates low?"

...(read more)

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After Morning Volatility, Bond Markets Back in Friday's Range

Matthew Graham — Mon, 13 Feb 2012 17:20:00 GMT

MBS and Treasuries continue to trade at significantly improved levels from this morning. Bond markets put in their first major bounce shortly after the domestic open on rumors that the private sector announcement that was set to follow Wednesday's Eurogroup meeting would be delayed. Since then, limited European headlines (none really...) and non-existent economic data left today's scheduled Fed buying as the primary market mover.

Even though today's Fed buying was in the longest maturities, it provided an excuse to run the ball back up the field after overnight weakness. Volume has been quite light as markets are no doubt more interested in Wednesday's Greece-related headlines than those seen yesterday and this morning. 10's moved almost precisely to Friday's lowest yields and held there through the end of the Fed operation, bouncing back higher afterwards, but not before catching some support just over 1.98. That bounce is manifested below as Fannie 3.5's bounce at 103-14.

(video source: MBS Live)

103-18, as the video overlay points out, is more than just an incidental level of technical resistance for MBS. It also provided some brief resistance in late January, before being broken and serving a majority of February as absolute support. It's one of the most prominent pivot points in this historically high range of MBS prices. While we trade under it, we're more interested in the next technical levels below us: a horizontal pivot around 103-10 (not pictured below) as well as the lowest of the yellow lines below--a sort of last line of defense for the longer term trend channel. Crossing below either of those lines constitutes a potentially negative shift for MBS, and one that would probably shift lock biases, at least in the short term.

Bond market directionality continues to be highly uncertain, almost as if 10's are in an exaggerated holding pattern, experiencing big sideways swings while stocks calmly trend upward.

While things have been more sideways recently, the longer-term trend is still slightly bullish, continually bouncing back and forth around moving averages that are moving very slightly lower in general. The chart below shows the 21-dMaay moving average for 10yr yields just as one example of this "honing in" phenomenon where prices or yields move in generally decreasing orbits around some metric of central tendency. As you can see, that honing-in had been leading 10yr yields into a narrower orbit until late January when the most recent round of Greek bailout drama took center stage. As an aside, we think a confirmed breakout of the upper red line would be a significant development and a potential shift away from the prevailing bullish trend.

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MBS MID-DAY: 2/13/2012

Matthew Graham — Mon, 13 Feb 2012 16:19:35 GMT

MBS Live: MBS MID-DAY

Open MBS Live Dashboard

FNMA 3.5
103-18 : +0-05

FNMA 4.0
105-11 : +0-03

FNMA 4.5
106-22 : +0-02

FNMA 5.0
108-01 : +0-02

GNMA 3.5
105-04 : +0-05

GNMA 4.0
107-26 : +0-05

GNMA 4.5
109-09 : +0-03

GNMA 5.0
111-06 : +0-06

FHLMC 3.5
103-10 : +0-05

FHLMC 4.0
104-31 : +0-03

FHLMC 4.5
106-06 : +0-03

FHLMC 5.0
107-23 : +0-01

Pricing as of 11:04 AM EST

Morning Market Updates

A recap of MBS Market Updates provided by MND Analysts and streamed live to the MBS Live Dashboard.

9:59AM : ALERT: MBS Pop Higher on Meeting Delay Rumors

Greece had been slated to announce the terms of Private Sector Investors' involvement in the bailout. This was expected to follow Wednesday's Eurogroup meeting and to indicate a hefty 70% haircut. Rumors that this announcement will not only be delayed, but could point to even bigger haircuts is currently fueling a bid in Treasuries, as well as the biggest pop of volume on the day.

10yr yields ticked into positive territory, down almost 1bp from Friday's latest levels at 1.9758, but not quite down to 3pm levels yet (1.969). MBS are a few ticks better than last check, currently up 1 tick on the day at 103-15, in the middle-to-high end of Friday's trading range.

9:04AM : ALERT: MBS Only Slightly Weaker as Greek Deal Waits on More Meetings

Bond markets begin the week in slightly worse territory than Friday's after Greek parliament voted to approve the austerity measures requisite for the country's bailout funds. The overnight session was not especially brisk in terms of volume or volatility. Because the Greece news was out by Sunday afternoon, we simply saw a moderate pop of volume at the European open, but this only equated to 10yr yields rising from 2.0 to 2.026.

That's because the passing of austerity, in and of itself, doesn't guarantee that the next aid tranche will be released. That fate is set to be decided on Wednesday at a Eurogroup meeting, which is incidentally a follow up to last week's similar meeting after Greece was unable to meet the austerity requirements to get approval.

MBS are holding their own in early trading with Fannie 3.5's on the verge of breaking even on the day, currently down only 1 tick at 103-13. 10yr yields are 1.25bps higher than Friday's latest levels at 1.9965. Despite a pull-back from overnight highs, S&P futures are still roughly 10 points higher versus Friday's close.

For the week's full economic calendar, see "The Week Ahead" below:

8:07AM : Greek Austerity Vote Lifts Euro

(Reuters) - Relief over the passing of sweeping austerity measures by the Greek parliament saw stocks and the euro gain on Monday, but with several issues still to be resolved before the shadow of a messy debt default is lifted, gains were fragile.

U.S. stock index futures pointed to a recovery for equities on Wall Street after delays in agreeing the Greek bailout deal last week caused the S&P 500 index to suffer its biggest loss of the year on Friday.

"People were losing patience with Greece. In the end they got their act together and it's definitely a positive," Markus Huber, head of German sales trading at ETX Capital, said.

Before Greece can secure a second rescue and get the $14 billion euros it needs to meet debt repayments due on March 20 it must still explain how a further 325 million euros ($428.6 million) of spending cuts will be reached, and give its nervous creditors binding assurances the full plan will be implemented.

The focus is now on a euro zone finance ministers meeting on Wednesday that is due to decide on approval of the next 130-billion euro aid package.

Featured Market Discussion

A recap of the featured comments from the Live Discussion on the MBS Live Dashboard.

Victor Burek : "so the next leader of Greece is saying pass this now..so we get the money, then we will change the terms afterward...is the EU dumb enough to give them more money?"

Victor Burek : ""I am calling on you to vote for the new loan agreement because I want to avoid falling into the abyss, to restore stability," he told Sunday's parliamentary debate, "so that we can have the possibility tomorrow to negotiate and change the policy that is being imposed upon us today." "We have to exist first to be able to change it." "

Victor Burek : "here is what he said..and the elections are in april"

Andrew Horowitz : "heard some interesting chatter this morning, thought I would share, the best thing for Europe would be Greece defaulting, if not and the bailout comes to pass, the contagion would spread faster and easier to the other PIIGS, most of the banks have already wrote down most of their greek holdings and it would send the proper message to other nations that will definitely line up behind"

Victor Burek : "Greece..who is ahead in the polls has already vowed to renegotiate the bill that was passed last night"

Victor Burek : "the next leader of ""

Matt Hodges : "interesting that the 3 major parties in parliament have expelled numerous members who voted no"

Andy Pada : "you have to think that at some point there is going to be a relevant political party who will promote the leave the Eurozone platform and that this party will get a significant % of popular support."

Matt Hodges : "with the rioting and two more votes in greece, didn't think we'd be hurt - but nonetheless a nice turnaround from 10 yr -10"

Matthew Graham : "interesting insights into dynamic between Germany and Greece: http://www.reuters.com/article/2012/02/13/eurozone-greece-germany-idUSL5E8DD5C520120213"

Jeff Anderson : "GM, all. Down 3 ticks. zzzzz. Someone's not buying the Greece deal yet."

Matt Hodges : "Greece, rioting, 10 year saying "chill""

Andrew Horowitz : "nice quiet market"

Matt Hodges : "nice recovery in the 10 year"

...(read more)

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The Week Ahead: Domestic Data, Possible Greek Bailout Approval

Matthew Graham — Mon, 13 Feb 2012 13:01:00 GMT

Bond markets begin the week in slightly worse territory than Friday's after Greek parliament voted to approve the austerity measures requisite for the country's bailout funds. But in and of itself, the passing of austerity doesn't guarantee the release of Greece's next aid tranche. That fate is set to be decided at a Eurogroup meeting on Wednesday. Incidentally, a similar meeting stood out as an important economic event last week, but Greece was unable to reach a consensus on requisite austerity measures. As a results, this week's meeting was announced as a follow-up, ostensibly allowing Greek political leaders an opportunity to get on the same page. (As a bit of an aside, recall that Greece's PM Papademos last week said that any members of the government who didn't support austerity measures could not remain in the government. That's one way to get on the same page).

In conjunction with determining Greek bondholder's private sector involvement, this meeting is shaping up to be the focal point of the week, with the assumption being more pronounced weakness ahead for bond markets if the deal manages to get approved. The parliament vote, which merely "keeps hope alive" as it were, has already lifted stock futures to their highs of the year and brought 10yr yields back over 2%, currently 2.2bps higher from Friday at 2.005. MBS are moderately lower, just on the low side of Friday's range, down 3 ticks at 103-11.

Vying for the attention of market participants will be a robust week of domestic economic offerings with Monday standing as an exception to an otherwise busy calender. There are no significant pieces of economic data set for release today, so we're left to watch the unfolding drama that may arise over the Greek austerity approval and anticipatory buzz over Wednesday's voting.

The first report of the week, Retail Sales tomorrow morning at 8:30 AM Eastern, is also the most important in terms of domestic data. We could well imagine some tough moments ahead for bond markets this week if the Greek deal is approved AND economic data on the home-front is on the strong side. Whether or not those "tough moments" mean that the 10yr benchmark rises above last week's high yields near 2.08 remains to be seen, but we'd certainly be prepared for that possibility.

MBS Live Econ Calendar:
Week Of Mon, Feb 13 2012 - Fri, Feb 17 2012
Time	Event	Period	Unit	Forecast	Prior
Tue, Feb 14
08:30	Retail sales mm	Jan	%	0.7	0.1
08:30	Retail sales ex-autos mm	Jan	%	0.5	-0.2
08:30	Export prices mm	Jan	%	0.2	-0.5
08:30	Import prices mm	Jan	%	0.3	-0.1
10:00	Business inventories mm	Dec	%	0.5	0.3
Wed, Feb 15
07:00	Mortgage market index	w/e	--	--	810
07:00	Mortgage market: change	w/e	%	--	7.5
07:00	Mortgage refinance index	w/e	--	--	4500.7
07:00	Refinancing: change	w/e	%	--	9.4
07:00	MBA Purchase: change	w/e	%	--	0.1
07:00	MBA 30-yr mortgage rate	w/e	%	--	4.05
07:00	MBA Purchase Index	w/e	--	--	181.9
08:30	NY Fed manufacturing	Feb	--	15.0	13.48
09:00	Overall net capital flows	Dec	bl	--	59.8
09:00	Foreign buying, T-bonds	Dec	bl	--	54.0
09:15	Capacity utilization mm	Jan	%	78.6	78.1
09:15	Industrial output mm	Jan	%	0.6	0.4
10:00	NAHB housing market indx	Feb	--	26	25
Thu, Feb 16
08:30	Producer prices mm	Jan	%	0.4	-0.1
08:30	Producer prices, core mm	Jan	%	0.2	0.3
08:30	Producer prices, core yy	Jan	%	2.7	3.0
08:30	Initial Jobless Claims	w/e	k	365	358
08:30	Continued jobless claims	w/e	ml	3.5	3.515
08:30	Housing starts number mm	Jan	ml	0.675	0.657
08:30	Building permits: number	Jan	ml	0.680	0.671
Fri, Feb 17
08:30	Consumer Prices mm	Jan	%	0.3	0.0
08:30	Core CPI mm	Jan	%	0.2	0.1
08:30	Core CPI yy	Jan	--	2.2	2.2
10:00	Leading index chg mm	Jan	%	0.5	0.4
08:30	Real Earnings	Jan	%	0.1	0.5

...(read more)

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MBS RECAP: 2/10/2012

Matthew Graham — Fri, 10 Feb 2012 21:22:52 GMT

MBS Live: MBS RECAP

Open MBS Live Dashboard

FNMA 3.5
103-15 : +0-06

FNMA 4.0
105-09 : +0-04

FNMA 4.5
106-19 : +0-04

FNMA 5.0
107-31 : +0-05

GNMA 3.5
105-00 : +0-06

GNMA 4.0
107-22 : +0-06

GNMA 4.5
109-05 : +0-07

GNMA 5.0
110-31 : +0-10

FHLMC 3.5
103-06 : +0-06

FHLMC 4.0
104-29 : +0-02

FHLMC 4.5
106-04 : +0-04

FHLMC 5.0
107-22 : +0-04

Pricing as of 4:04 PM EST

Afternoon Market Updates

A recap of MBS Market Updates provided by MND Analysts and streamed live to the MBS Live Dashboard.

2:09PM : ALERT: MBS Stable Into Afternoon. Positive Reprice Potential Increasing

As we said earlier in the day, lenders are normally more conservative with positive reprices around the MBS Settlement cycle, not to mention the same is also true for Friday afternoons. So all we can really say is that the shape of MBS trading today is similar to past examples that have resulted in positive reprices. Fannie 3.5's haven't made any tremendous gains, but they've been in a fairly narrow range between 103-15 and 103-17 cine around 11am.

This is better than the 103-13 to 103-14 range that was prevalent when most lenders were releasing rate sheets, but more important than the range was the fact that the direction of bond market trading still looked a bit uncertain this morning, whereas now we look to be out of the woods, so to speak, with respect to seeing losses on the day.

Bottom line, it's possible we see a reprice or two, but not necessarily likely given the environment. So the better take-away may be that we're not looking like we're at much risk of negative reprices for those inclined to float until cut-off or beyond.

12:37PM : Fed: Bernanke Speech on 'Housing Markets in Transition'

Chairman Ben S. Bernanke's speech at the 2012 National Association of Homebuilders International Builders' Show, Orlando, Florida...

Featured Market Discussion

A recap of the featured comments from the Live Discussion on the MBS Live Dashboard.

Matt Hodges : "same rule"

Scott Valins : "are fannie/freddie 7 years for foreclosures?"

Victor Burek : "i think the problem many had with tarp and also the problem the greek citizens have is yes...without tarp adn the austerity, things would get worse..but would get to a healthier economy sooner"

Brent Borcherding : "You're in or you're out."

Matthew Graham : "Because why would we want to head out for the weekend without a fresh dose of Greek Drama?"

Matt Hodges : "i like it"

Matt Hodges : "nuclear option"

Matthew Graham : "RTRS - RPT-GREEK PM SAYS WE MUST DO WHATEVER IT TAKES TO APPROVE BAILOUT DEAL OR FACE CATASTROPHE "

Matthew Graham : "RTRS - RPT - GREEK PM SAYS WHOEVER DISAGREES WITH BAILOUT DEAL CANNOT STAY IN THE GOVERNMENT "

Matthew Graham : "RTRS - OBAMA BUDGET TO SAY THAT FISCAL DEFICIT FOR 2013 WOULD EQUAL 5.5 PERCENT OF GDP - U.S. OFFICIAL "

Matthew Graham : "RTRS- OBAMA BUDGET TO PROJECT DEFICIT OF $1.33 TRILLION IN FISCAL YEAR 2012, $901 BILLION IN FISCAL 2013-U.S. OFFICIAL "

Brent Borcherding : "If the property is DU Refi Plus eligible...the borrower can have 100 properties, doesn't matter. Obviously, some lenders have overlays, but I've done this numerous times."

Adam Dahill : "question: borrower has 10 financied properties. I was going to CITI but they have a 714 fico and Citi requires 720 when you have 5-10 properties. Some of the homes are refi plus elligible. Does that make any difference? Any other lenders other than Flagstar that do 5-10 properties?"

Matt Hodges : "my u/w recently told me there is a one month extension that they can do, but only before it expires"

tom duff : "anyone help with this? I have an FHA deal aprsl has an effective date of 09/07/2011 the apprasier uploaded the report 10/07/2011, underwriting then asked for updated comps which the apprasier provided and uploaded 12/16/2011. UW is now telling me we need a new aprsl bc the effective date expired. Is there anyway around getting a new aprsl? thx in advance for any help..."

Matt Hodges : "monthly is based on loan amount"

Victor Burek : "yes..higher loan amount, higher mip monthly"

Gaius Rossini : "hey quick FHA question if you guys can help me out - if closing costs are rolled into a loan, the monthly MIP increases as well right?"

Matthew Graham : "http://www.federalreserve.gov/newsevents/speech/bernanke20110210a.htm"

...(read more)

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MBS MID-DAY: 2/10/2012

Matthew Graham — Fri, 10 Feb 2012 16:22:45 GMT

MBS Live: MBS MID-DAY

Open MBS Live Dashboard

FNMA 3.5
103-17 : +0-07

FNMA 4.0
105-10 : +0-04

FNMA 4.5
106-19 : +0-04

FNMA 5.0
107-29 : +0-03

GNMA 3.5
105-02 : +0-08

GNMA 4.0
107-23 : +0-07

GNMA 4.5
109-04 : +0-06

GNMA 5.0
110-28 : +0-06

FHLMC 3.5
103-08 : +0-08

FHLMC 4.0
104-30 : +0-03

FHLMC 4.5
106-03 : +0-03

FHLMC 5.0
107-19 : +0-01

Pricing as of 11:03 AM EST

Morning Market Updates

A recap of MBS Market Updates provided by MND Analysts and streamed live to the MBS Live Dashboard.

10:35AM : ALERT: Bond Markets Doing Their Best To Hold Overnight Gains

Things have been fairly calm so far this morning, especially considering the raft of overnight and early morning headlines indicating that one of Greece's political party leaders will not vote to approve the bailout package. 10yr yields opened about 6bps lower and are currently at those same levels after having explored territory just over 1bp in either direction (aka: pretty narrow range).

Yesterday's roll in Fannie and Freddie 30yr MBS Coupons have the appearance that prices dropped an extra 8/32nds give or take. But this is because February coupons are charted on 2/10 while March coupons are charted today--in other words, they're the new "front month." March coupons are essentially right where they were when they came in this morning, just like Treasury yields.

The effects of the Consumer Sentiment data were mostly seem in stock markets, which weakened frolling the 9:55am release. Bond markets have been trending in a firmly sideways fashion despite this, with 10yr yields perhaps slanted a bit bearishly, while MBS are left to try to hold a price floor around 103-12. So far, so good in that regard as prices are currently 103-14 in Fannie 3.5's, with volume dying down. We'll get a Bernanke speech at 12:30, which may or may not be too late on this Friday to stir up much of a response. Beyond that, we're watching today's highs in 10yr yields around 1.996. If they were to break much higher than that, it could coincide with MBS having a tough time holding on to their lows of the day.

10:04AM : ECON: Survey of Economists Shows Better Expected Job Growth

The Philadelphia Federal Reserve released a first-quarter survey of 45 forecasters showing upward revisions to expected payroll growth. This provides some counterpoint to bond-market benefits felt from the weaker-than-expected Consumer Sentiment data out five minutes earlier.

RTRS - QUARTERLY FORECASTERS SURVEY - US Q1 GDP GROWTH SEEN AT +2.2 PCT VS PREVIOUS FORECAST +2.4 PCT
RTRS - FORECASTERS SURVEY - US Q2 GDP GROWTH SEEN AT +2.3 PCT VS PREVIOUS FORECAST +2.4 PCT
RTRS - SURVEY - US Q1 PAYROLLS SEEN GROWING AVERAGE 160,100/MONTH VS PVS FORECAST 121,000/MONTH
RTRS - SURVEY - US Q2 PAYROLLS SEEN GROWING AVERAGE 141,900/MONTH VS PVS FORECAST 126,300/MONTH
RTRS - SURVEY - US Q1 UNEMPLOYMENT RATE SEEN AT 8.4 PCT VS PREVIOUS FORECAST 8.9 PCT
RTRS - SURVEY - US Q2 UNEMPLOYMENT RATE SEEN AT 8.3 PCT VS PREVIOUS FORECAST 8.9 PCT
RTRS - SURVEY - US Q1 CORE PCE INFLATION SEEN AT +1.6 PCT VS PREVIOUS FORECAST +1.6 PCT
RTRS - SURVEY - US Q1 CORE CPI INFLATION SEEN AT +1.9 PCT VS PREVIOUS FORECAST +1.8 PCT

9:58AM : ECON: Consumer Sentiment Slightly Lower Than Expected

RTRS - US CONSUMER SENTIMENT PRELIMINARY FEB 72.5 (CONSENSUS 74.5) VS FINAL JAN 75.0
RTRS - CURRENT CONDITIONS INDEX PRELIMINARY FEB 79.6 (CONSENSUS 84.5) VS FINAL JAN 84.2
RTRS - CONSUMER EXPECTATIONS INDEX PRELIMINARY FEB 68.0 (CONSENSUS 69.5) VS FINAL JAN 69.1
RTRS - 12-MONTH ECONOMIC OUTLOOK INDEX PRELIMINARY FEB 82 VS FINAL JAN 82
RTRS - 1-YEAR INFLATION OUTLOOK PRELIMINARY FEB 3.2 PCT VS FINAL JAN 3.3 PCT
RTRS - 5-YEAR INFLATION OUTLOOK PRELIMINARY FEB 2.9 PCT VS FINAL JAN 2.7 PCT

Bond markets weakened slightly ahead of the report but have since bounced back to previous levels, or otherwise seem to be in the process of doing so. Stocks are down about 3 points in the S&P and volume is some of the best of the day.

9:07AM : ECON: Trade Deficit In Line With Expectations. No Market Reaction

RTRS- US DEC TRADE DEFICIT $48.80 BLN (CONSENSUS $48.00 BLN) VS NOV DEFICIT $47.06 BLN (PREV $47.75 BLN)
RTRS- US DEC EXPORTS +0.7 PCT VS NOV -1.0 PCT, IMPORTS +1.3 PCT VS NOV +1.0 PCT
RTRS- US DEC GOODS DEFICIT $64.30 BLN, SERVICES SURPLUS $15.50 BLN
RTRS- US DEC EXPORTS $178.76 BLN VS NOV $177.53 BLN, IMPORTS $227.56 BLN VS NOV $224.58 BLN
RTRS- U.S. DEC CAPITAL GOODS IMPORTS RECORD HIGH $44.67 BLN VS NOV IMPORTS $43.64 BLN
RTRS- U.S.-CHINA DEC TRADE DEFICIT $23.14 BLN VS NOV DEFICIT $26.87 BLN; US-GERMANY DEC DEFICIT RECORD HIGH $4.83 BLN
RTRS- US-OPEC DEC TRADE DEFICIT $9.10 BLN VS NOV DEFICIT $9.11 BLN
RTRS- US DEC OIL IMPORT PRICE $104.13/BBL VS NOV $102.50/BBL, +30.5 PCT FROM DEC'10 $79.79/BBL
RTRS- US 2011 TRADE DEFICIT $558.02 BLN, HIGHEST SINCE 2008, VS 2010 DEFICIT $500.03 BLN
RTRS- US 2011 TOTAL IMPORTS $2.66 TRLN, EXPORTS $2.10 TRLN AT RECORD HIGHS
RTRS- U.S.-CHINA 2011 TRADE DEFICIT AT RECORD HIGH $295.5 BLN; EXPORTS, IMPORTS AT RECORD HIGHS

Featured Market Discussion

A recap of the featured comments from the Live Discussion on the MBS Live Dashboard.

Matt Hodges : "appears WF gave back what they took away in RP yesterday PM"

Matthew Graham : "RTRS- THOMSON REUTERS/U. OF MICH CURRENT CONDITIONS INDEX PRELIMINARY FEB 79.6 (CONSENSUS 84.5) VS FINAL JAN 84.2 "

Matthew Graham : "RTRS - THOMSON REUTERS/U. OF MICH US CONSUMER SENTIMENT PRELIMINARY FEB 72.5 (CONSENSUS 74.5) VS FINAL JAN 75.0 "

Matthew Graham : "more explanation: http://www.mortgagenewsdaily.com/mortgage_rates/blog/180770.aspx"

Andrew Horowitz : "the last trade that you saw yesterday was the last trade of the 3.5 coupon for delivery into February, the current March coupon was trading and has been trading for several months, we roll to the next coupon for delivery which usually has a 10 tick spread "

Michael Lewin : "If yesterday the 3.5 ended at 103.23, and today it is currently at 103.14, how is it up 4 ticks?"

Steven Stone : "look at the chart of higher coupons...very evident there...looks like almost no roll at all"

Steven Stone : "as more people think that, the roll tightens"

Steven Stone : "if you dont think rates are going up...you can buy a later delivery...you get a bit of a discount for that"

Steven Stone : "tighter rolls mean there is less interrest rate risk. "

Matt Hodges : "is it good, bad or indifferent to us?"

Matthew Graham : "103-22 to 103-14"

Matthew Graham : "ended up only being 8 ticks"

Scott Valins : "did we roll yesterday?"

Jeff Anderson : "I'm pretty confident their 18th meeting on this will be the charm."

Matthew Graham : "I'm tellin' ya! It's no coincidence that Greece is the birthplace of theater. These guys know their drama and ain't shy about delivering it hand over fist"

Matthew Graham : "RTRS - GREEK FAR-RIGHT PARTY LEADER SAYS ELECTIONS WOULD NOT PROVIDE A SOLUTION NOW, WOULD NEED MORE TIME "

Matthew Graham : "RTRS - I explained to the other political leaders that I cannot vote for this loan agreement," George Karatzaferis, head of the LAOS party, told a news conference. "

Matthew Graham : "RTRS- GREEK FAR-RIGHT PARTY LEADER SAYS ASKS FOR RESHUFFLE OF PAPADEMOS TECHNOCRAT GOVERNMENT "

Matthew Graham : "RTRS- RPT- GREEK FAR-RIGHT PARTY LEADER SAYS CANNOT BACK BAILOUT AGREEMENT "

Matthew Graham : "additionally, there were a few more headlines just after 7am eastern, and a huge volume spike for pre-market hours (not to mention 10's hit 8am at a ridiculously high futures contracts volume of 340k):"

Matthew Graham : "here you go Jeff: http://www.mortgagenewsdaily.com/mortgage_rates/blog/247045.aspx"

Matthew Graham : "" It all just looks like a broad-based unwinding of whatever optimism was created by Greece's negotiations. Are we doomed to relive all of this next week? Anyone seen Punxsutawney Phil? ""

Matthew Graham : "just spell checking what I wrote last night Jeff, shouldn't be long"

Jeff Anderson : "GM, all. Where's the cliffe notes for what happended overnight?"

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The Day Ahead: Deja Vu All Over Again For Greece

Matthew Graham — Fri, 10 Feb 2012 12:47:00 GMT

How many times must we go through the same motions surrounding the various bailout/solvency/reform issues in Greece? Granted, things are just slightly different each time, but the aspects of "seemingly urgent decisions required" as well as "certain deadlines needing to be hit" or else face the consequences of "almost certain Greek default and probable exit from the Eurozone" feel like they've been present in each iteration of the broader situation that we refer to as "Greek Drama."

After all the sturm and drang of the most recent installment of Greece bailout drama, and even after several Eurozone officials said today in several different ways that said drama was resolved, we now have several other Eurozone officials saying that, while the drama is resolved, it actually, possibly, maybe isn't totally and completely resolved as we thought, and that now the real date by which the world can expect the next, dare we say, "resolution," is NEXT WEDNESDAY!

Today's big meeting was a Eurogroup get together, which includes finance ministers from member stats as well as Eurogroup officials including president Jean-Claude Juncker. Here's what he had to say late Thursday.

RTRS - EUROGROUP'S JUNCKER SAYS NEW GREEK BAILOUT MUST RESPECT OCT SUMMIT PARAMETERS
RTRS - JUNCKER SAYS GREEK DEBT SHOULD BE REDUCED TO 120 PCT/GDP BY 2020
RTRS - JUNCKER SAYS NOT ALL NECESSARY ELEMENTS ON THE TABLE TO TAKE DECISION ON SECOND BAILOUT FOR GREECE ON THURSDAY
RTRS - JUNCKER SAYS GREEK PARLIAMENT MUST TAKE DECISIONS FIRST
RTRS - JUNCKER SAYS EURO ZONE MUST GET ASSURANCES FROM GREECE ON REFORM IMPLEMENTATION
RTRS - JUNCKER SAYS SUCCESSFUL PSI IN GREECE IS A MUST FOR A SECOND GREEK BAILOUT
RTRS - JUNCKER SAYS EURO ZONE MINISTERS WILL MEET ON WEDNESDAY AGAIN, IF GREECE MEETS CONDITIONS ON SECOND BAILOUT
RTRS - JUNCKER SAYS ANY MONEY FROM EURO ZONE FOR GREEK PSI WILL BE SUBJECT TO IMPLEMENTATION BY ATHENS OF PRIOR ACTIONS
RTRS - JUNCKER SAYS GREEK PARLIAMENT WILL NOT REJECT THE AGREED REFORM

To paraphrase: "sorry folks, not quite there, but if Greece gives us some assurances, then we're good. Oh, and the private sector haircuts have to be agreed-upon, but we're pretty confident that will work out fine, and then we'll meet back up here next Wednesday to see if we can ink this damn deal." Admittedly those were my words as I heard them in my head whilst reading Juncker's wires.

To reiterate a previous stance we've taken. We only pay attention to this stuff because markets seem to be paying some degree of attention to it, and we acknowledge, respect, and understand that savvy market participants react to Greek headlines only because other market participants react to it, but very likely are just as weary of this frustratingly repetitive farce as most of the rest of us are. Swim against the wave or ride it until the tide turns, easier to ride the wave for now, as odious as that may be.

Speaking of tides turning, bond markets have done much by way of bouncing back so far this morning and in the overnight session. 10's are back down to 1.975 and March coupon Fannie 3.5's are set to open 5 ticks higher at 103-15. Stocks shot lower with similar determination as the S&P is off almost 15 points at the moment. It all just looks like a broad-based unwinding of whatever optimism was created by Greece's negotiations. Are we doomed to relive all of this next week? Anyone seen Punxsutawney Phil?

Data today includes the week's headliner from a domestic economic perspective in the form of International Trade at 8:30am, expected to show just a slightly bigger deficit than last month's -47.8 bln, (forecast: -48.3 bln). Then there's Reuters/U.Michigan Consumer Sentiment at 9:55am, seen at 74.0 vs last month's 75.0. Bernanke speaks at 12:30 on housing and FOMC voter Pianalto on the same topic at 2pm.

		Period		Unit	Actual	Forecast	Prior
Monday, February 06
	No Significant Scheduled Economic Data
Tuesday, February 07
13:00	3-Yr Note Auction	--	bl		--	32.0	--
15:00	Consumer credit	Dec	bl		19.31	7.2	20.37
Wednesday, February 08
07:00	Mortgage market index	w/e	--		810.0		753.3
07:00	Mortgage market: change	w/e	%		7.5		-2.9
07:00	MBA Purchase Index	w/e	--		181.9		181.7
07:00	Mortgage refinance index	w/e	--		4500.7		4113.8
07:00	Refinancing: change	w/e	%		9.4		-3.6
07:00	MBA Purchase: change	w/e	%		0.1		-1.7
07:00	MBA 30-yr mortgage rate	w/e	%		4.05		4.09
13:00	10-yr Note Auction	--	bl		--	24.0	--
Thursday, February 09
08:30	Initial Jobless Claims	w/e	k		358	370	367
08:30	Continued jobless claims	w/e	ml		3.515	3.500	3.437
10:00	Wholesale inventories mm	Dec	%		+1.0	0.4	0.1
10:00	Wholesale sales mm	Dec	%		+1.3	0.5	0.6
13:00	30-Yr Bond Auction	--	bl		--	16.0	--
Friday, February 10
08:30	International trade mm $	Dec	bl		--	-48.3	-47.8
09:55	U.Mich sentiment	Feb	--		--	74.0	75.0
09:55	U Mich conditions	Feb	--		--	84.2	84.2
09:55	U.Mich expectation	Feb	--		--	69.1	69.1
14:00	Federal budget, $	Jan	bl		--	-50.0	-85.97

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MBS RECAP: 2/9/2012

Matthew Graham — Thu, 09 Feb 2012 21:22:41 GMT

MBS Live: MBS RECAP

Open MBS Live Dashboard

FNMA 3.5
103-22 : -0-05

FNMA 4.0
105-13 : -0-08

FNMA 4.5
106-19 : -0-07

FNMA 5.0
107-30 : -0-04

GNMA 3.5
105-02 : -0-06

GNMA 4.0
107-24 : -0-07

GNMA 4.5
109-03 : -0-06

GNMA 5.0
110-28 : -0-04

FHLMC 3.5
103-13 : -0-06

FHLMC 4.0
105-00 : -0-07

FHLMC 4.5
106-03 : -0-06

FHLMC 5.0
107-27 : +0-02

Pricing as of 4:02 PM EST

Afternoon Market Updates

A recap of MBS Market Updates provided by MND Analysts and streamed live to the MBS Live Dashboard.

2:06PM : ALERT: Treasuries, MBS Attempting to Turn a Corner Following 30yr Auction

Volume surged briefly following the 1pm 30yr Bond Auction, but has since died down. In the process, Treasury yields and MBS prices experienced a bit of volatility, but that now seems to be resolving itself in a favorable manner. Fannie 3.5 MBS are down only 4 ticks on the day at 103-23, and 10yr yields are down to 2.045 after being as high as the 2.07's before the auction.

New and meaningful headlines out of Europe have slowed to a trickle and there are no other major decisions or announcements scheduled to be made today. Several officials are on record as saying that the Greek bailout agreement is a done deal but other officials note that nothing official will be announced today.

Whether it's some hesitation on that news or simple technical exhaustion after selling off nearly 30 bps in February, 10yr yields look as if they'll record a closing mark under or very close to long term support for their trend channel which passes through 2.56 today.

MBS charts are starting to look fairly decent considering the morning weakness, with a nice double bounce off 103-18. If prices were to continue to operate at current levels, a few lenders might soon consider a positive reprice, but the morning volatility means there could be more hesitation than normal. We also tend to see fewer reprices during the MBS settlement cycle, and today is "48 hour day" and March coupons will be front-month after the close tonight.

11:39AM : ALERT: MBS, Treasuries Bounce At February's Weakest Levels

Although it's still too soon to plan on current support levels continue to hold up through the day, MBS have done a decent job of holding the line at February's lows this morning. From the 3rd through the 8th of the month, Fannie 3.5's ground incessantly against 103-18 and have bounced there again this morning. 10yr yields are much higher than their highest February levels and are trying to establish some support at high yields from earlier this morning just under 2.06.

The fates of Fannie 3.5's with respect to 103-18 seem tied to this 2.06 mark in Treasuries for now, but given the recent volatility in spreads, a linear relationship between the two is not guaranteed, especially with roll-related liquidity considerations.

Several European finance ministers have come out saying that there won't be any results from the Eurogroup meeting today, something that Greece's PM indicated as goal in extending last night's meeting. That could be partially fueling current bounce attempts for bond markets, but technical factors could certainly be in play as the sell off takes 10yr yields to very long-term trend channel support. Markets may also be interested to see how today's 30yr bond auction goes as well as any other enlightening headlines out of Greece.

After bouncing at 103-18, Fannie 3.5's are currently back to 103-22 while 10yr yields are down to 2.0399 after nearly touching 2.06. Despite the bounce, we did see one report of a reprice for the worse, but that was from a lender that tends to price earlier in the morning than most. The majority of lenders priced late enough in the morning that MBS had already experienced most of their losses. Thus, we don't think additional reprices for the worse are too terribly likely unless prices turn around and start falling again. It could happen, but at the moment, is not warranted by the price action.

Featured Market Discussion

A recap of the featured comments from the Live Discussion on the MBS Live Dashboard.

Matt Hodges : "DU doesn't allow"

Matt Hodges : "yes"

Christopher Max : "LP Question--I have a non-occupant co-borrower on the loan for qualification purposes. I have done plenty of these for FHA but never COnventional. Are we allowed to count the residence as a primary residence just like FHA?"

Chris Kopec : "I agree AH.....personally, I think HVCC pretty much shot the non-APR nature of appraisals in the can. But now, I'm getting an after-disclosure additional charge that I need to reconcile with my client. Beyond the principle of the thing, I now have an underdisclosed GFE."

Andrew Horowitz : "that seems felonious charge in my book Owl"

Michael Tadros : "REPRICE: 2:10 PM - Provident Funding Better"

Frank Ceizyk : "One investor - One decision... We are not the broker we are the lender. We currently have 30MM in "Private Money" available for the following: * Non Owner SFR * Non Owner Rehab * Apt Buildings * All Types of Commercial * * California Properties ONLY PLEASE "

Frank Ceizyk : "from flyer I got emailed last summer: To Qualify: * LTV no more than 60% 1st TDS only * Stated Income - No Problem * Credit - Not An Issue * California Properties ONLY PLEASE "

Frank Ceizyk : "commercial stated started appearing year and a half ago..."

Chris Kopec : "Has anyone seen an AMC charge to tranfer an apprasial? I just got word that one of the AMCs would be chargin $150 in order to transfer an appraisal to another lender. That seems to be a very questionable practice, in my opinion."

Jason Wilborn : "read an article 3 months ago that sub-prime was making a comeback and investor groups were creating entities with an appetite to buy and sell the paper"

Brent Borcherding : "1-0 MG vs Santelli"

Matthew Graham : "post auction trading looking more like a B and less like a C-"

Matthew Graham : "which is much higher"

Matthew Graham : "yeah, he's probably looking at overal BTC average"

Victor Burek : "santelli gave it an c-"

Matthew Graham : "small tail as far as 30yr auction tails go and higher than average BTC for refundings"

Chris Kopec : "Maybe a little post-auction bounceback is now in store?"

Matthew Graham : "another "B""

Matthew Graham : "RTRS- U.S. 30-year bond BID-TO-COVER RATIO 2.47, NON-COMP BIDS $36.50 MLN"

Matthew Graham : "RTRS- U.S. SELLS $16 BLN 30-YEAR BONDS AT HIGH YIELD 3.240 PCT, AWARDS 98.13 PCT OF BIDS AT HIGH"

Matthew Graham : "been on the upswing Ira"

Ira Selwin : "MG how is volume in the 4's?"

Victor Burek : "lets hope the auction can turn things around for us"

Matt Sullivan : "more comments about the mortgage settlement...yawn"

Matt Sullivan : "here comes Obama"

Chris Kopec : "Just some minor details remain....like how Greece will repay its debts.....otherwise, it's all goo."

Brent Borcherding : "MBS looking very resilient. "

Victor Burek : "German FinMin: Greek deal on spending cuts appears to not yet fulfill bailout conditions "

Andrew Horowitz : "According to Greek broadcaster ANA, the Deputy Labor Minister has resigned over the austerity deal. He's a member of the ruling coalition, specifically the PASOK party. Read more: http://www.businessinsider.com/deal-or-no-deal-some-troubling-news-about-the-state-of-the-greek-bailout-2012-2#ixzz1lu8HbVKg "

Brent Borcherding : "Dick Bove On The Foreclosure Settlement: There Is No Sanctity Of Contracts; Only Fools Meet Their Financial Commitments "

Brent Borcherding : "Great tagline...this mentality is picking up steam globally:"

Matthew Graham : "assuming we keep falling. if we don't keep falling, 103-11 is already an established pivot (as you can see in the chart that I linked or in the advanced charts). So if we're holding steady or improving, 103-11. Other pivots from there have been 103-06 and 103-02. And yes, certainly plenty of activity around 102-26 previously, but that assumes that the MBS are done trending, and we wouldn't be able to confirm that with the current move"

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MBS And Treasuries Off Their Lows. Long Term Trends In Play

Matthew Graham — Thu, 09 Feb 2012 19:27:00 GMT

Latest Alert From MBS Live:

Treasuries, MBS Attempting to Turn a Corner Following 30yr Auction - 2:06PM

The long term charts are exceedingly interest after today's price movements. Let's take a look at long term Fannie 3.5 30yr MBS. Granted, prices on this chart are about to "drop" as March coupons take the reigns from the February coupons that will no longer be traded after today, and currently, that will drop prices to 103-08, well below either the horizontal line seen in the chart, but still well within the long term trend channel. Implications for the future? None really, but this is the trend channel that we're in until we confirm a break lower or higher.

In Treasuries, we can now go back all the way to August in looking at a long term trend. This is one that we've posted a few times over the past few months, but things haven't ever lined up very well until today. Reason being: the prominent highs from late January, early December, all the lead up to the EU summit in mid-October (spike higher = failed breakout attempt), as well as numerous highs in August when the rally first got underway, all line up with the upper red line fairly well. And the lower red line is no slouch. The teal line we throw in as the horizontal pivot point that has been one of the best dividing lines between highs and lows throughout the really. When yields have been above or below, they've tended to stay there. If they stay below again this time, it should prove to be positive for MBS.

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MBS MID-DAY: 2/9/2012

Matthew Graham — Thu, 09 Feb 2012 16:17:36 GMT

MBS Live: MBS MID-DAY

Open MBS Live Dashboard

FNMA 3.5
103-18 : -0-09

FNMA 4.0
105-14 : -0-07

FNMA 4.5
106-20 : -0-06

FNMA 5.0
108-00 : -0-02

GNMA 3.5
105-02 : -0-06

GNMA 4.0
107-25 : -0-06

GNMA 4.5
109-03 : -0-06

GNMA 5.0
110-30 : -0-01

FHLMC 3.5
103-10 : -0-09

FHLMC 4.0
104-31 : -0-08

FHLMC 4.5
106-03 : -0-06

FHLMC 5.0
107-27 : +0-01

Pricing as of 11:04 AM EST

Morning Market Updates

A recap of MBS Market Updates provided by MND Analysts and streamed live to the MBS Live Dashboard.

10:05AM : ECON: Wholesale Inventories and Sales, Rise More Than Expected

The U.S. Census Bureau announced today that December 2011 sales of merchant wholesalers, except manufacturers’ sales branches and offices, after adjustment for seasonal variations and trading-day differences but not for price changes, were $413.1 billion, up 1.3 percent (+/-0.7%) from the revised November level and were up 11.8 percent (+/-1.1%) from the December 2010 level. The November preliminary estimate was revised downward $0.1 billion.

Total inventories of merchant wholesalers, except manufacturers’ sales branches and offices, after adjustment for seasonal variations but not for price changes, were $473.2 billion at the end of December, up 1.0 percent (+/-0.5%) from the revised November level and were up 10.0 percent (+/-1.2%) from the December 2010 level. The November preliminary estimate was revised downward $0.4 billion or 0.1 percent.

The December inventories/sales ratio for merchant wholesalers, except manufacturers’ sales branches and offices, based on seasonally adjusted data, was 1.15. The December 2010 ratio was 1.16.

RTRS- U.S. DEC WHOLESALE INVENTORIES +1.0 PCT (CONSENSUS +0.4 PCT) VS NOV 0.0 PCT (PREV +0.1 PCT)

RTRS- U.S. DEC WHOLESALE SALES +1.3 PCT (CONSENSUS +0.5 PCT) VS NOV +0.5 PCT (PREV +0.6 PCT)

10:01AM : Freddie Mac: Average Rates Steady at Record Lows

30-year fixed-rate mortgage (FRM) averaged 3.87 percent with an average 0.8 point for the week ending February 9, 2012, matching last week when it also averaged 3.87 percent. Last year at this time, the 30-year FRM averaged 5.05 percent.

15-year FRM this week averaged 3.16 percent with an average 0.7 point, up from last week when it averaged 3.14 percent. A year ago at this time, the 15-year FRM averaged 4.29 percent.

5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 2.83 percent this week, with an average 0.7 point, up from last week when it averaged 2.80 percent. A year ago, the 5-year ARM averaged 3.92 percent.

1-year Treasury-indexed ARM averaged 2.78 percent this week with an average 0.6 point, up from last week when it averaged 2.76 percent. At this time last year, the 1-year ARM averaged 3.35 percent.

Frank Nothaft, vice president and chief economist, Freddie Mac:

“A strong January employment report added upward pressure to most mortgage rates this week. The economy gained 243,000 jobs last month, the largest monthly gain since April 2011, and the unemployment rate fell to 8.3 percent, which was the lowest since February 2009. Although historical revisions also added 266,000 even more workers, they caused the labor participation rate to fall to 63.7 percent, representing the smallest share since May 1983, which offset some of the rise in mortgage rates.”

8:50AM : ALERT: MBS Outperforming Treasuries, Both Holding Steady After Claims

So far, it has not been a good day to watch the 10yr for an indication of how MBS are trading. 10 yr yields rose at a rather brisk pace overnight following news of significant progress in the Greek bailout negotiations, and have already tested the 2.04 pivot point this morning. That came after a Greek government official was quoted as saying "Yes, there is a deal," ostensibly indicating that the last remaining sticking point --supplementary pensions--had been resolved this morning. (For more on these overnight developments, see the link below).

But unlike Treasuries, production MBS are closer to unchanged, down only 2 ticks on the day at 103-25, and trading very much inside the bulk of yesterday's range. A stronger-than-expected Jobless Claims report didn't shake things up much, but other factors continue to weigh on bond markets this morning, including the ongoing trading of the Greek bailout developments, and ECB Pres. Mario Draghi speaking on the matter presently.

RTRS - DRAGHI SAYS TALKED TO GREEK PM, CONFIRMS DEAL ENDORSED BY GREEK PARTIES

Additionally, there's another Treasury auction to contend with: today's 30yr Bond at 1pm. That should mostly play second fiddle to Greek headline reactions though. Is it frustrating and strange that we continue to see "deja vu trading of deja vu announcements" out of the EU? Yes it is. But are markets trading it nonetheless? Yes they are. Free-thinking traders could try to swim against this wave, but it's much easier to ride it until better opportunities present themselves to swim back out to calmer waters.

8:34AM : ECON: Jobless Claims Fall to 358k From 373k Previously

In the week ending February 4, the advance figure for seasonally adjusted initial claims was 358,000, a decrease of 15,000 from the previous week's revised figure of 373,000. The 4-week moving average was 366,250, a decrease of 11,000 from the previous

The advance seasonally adjusted insured unemployment rate was 2.8 percent for the week ending January 28, an increase of 0.1 percentage point from the prior week's unrevised rate.

The advance number for seasonally adjusted insured unemployment during the week ending January 28, was 3,515,000, an increase of 64,000 from the preceding week's revised level of 3,451,000. The 4-week moving average was 3,498,000, a decrease of 33,000 from the preceding week's revised average of 3,531,000.

RTRS - JOBLESS CLAIMS FELL TO 358,000 FEB 4 WEEK (CONSENSUS 370,000) FROM 373,000 PRIOR WEEK (PREVIOUS 367,000)
RTRS - 4-WK AVG FELL TO 366,250 FEB 4 WEEK FROM 377,250 PRIOR WEEK (PREVIOUS 375,750)
RTRS - CONTINUED CLAIMS ROSE TO 3.515 MLN (CON. 3.500 MLN) JAN 28 WEEK FROM 3.451 MLN PRIOR WEEK (PREV 3.437 MLN)
RTRS - INSURED UNEMPLOYMENT RATE ROSE TO 2.8 PCT JAN 28 WEEK FROM 2.7 PCT PRIOR WEEK (PREV 2.7 PCT)
RTRS - 4-WK AVERAGE LOWEST SINCE WEEK ENDED APRIL 26, 2008 (361,500)

8:23AM : Holdout States, California and Florida, Back Into Mortgage Settlement

Reuters: California and New York, two key holdout states for a multi-state mortgage settlement, are expected to join the deal, smoothing the way for an announcement expected on Thursday, according to a person familiar with the matter.

Florida, with its large distressed housing market, was also close to joining the settlement that resolves civil government lawsuits over faulty foreclosures and servicing misconduct, a separate person familiar with the deal said...

Featured Market Discussion

A recap of the featured comments from the Live Discussion on the MBS Live Dashboard.

Matthew Graham : "RTRS - ACCORDING TO SETTLEMENT, BANKS COMMIT $20 BILLION TO FINANCIAL RELIEF FOR CONSUMERS"

Matthew Graham : "RTRS - SETTLEMENT IS WITH BANK OF AMERICA, JPMORGAN, WELLS FARGO, CITIGROUP, ALLY FINANCIAL "

Matthew Graham : "RTRS - U.S. FEDERAL AND STATE OFFICIALS ANNOUNCE $25 BILLION MORTGAGE SETTLEMENT WITH FIVE LARGEST MORTGAGE SERVICERS "

Matt Hodges : "just seems to be a disconnect from 10 year to 3.5 mbs"

Matthew Graham : "never too early as far as i know MH"

Matt Hodges : "too early for gov't buying of MBS, MG?"

Matthew Graham : "RTRS - DRAGHI SAYS TALKED TO GREEK PM, CONFIRMS DEAL ENDORSED BY GREEK PARTIES "

Andy Pada : "good jobless claims # and a Greek deal and we are only down 1/32"

Matthew Graham : "RTRS- US JOBLESS CLAIMS FELL TO 358,000 FEB 4 WEEK (CONSENSUS 370,000) FROM 373,000 PRIOR WEEK (PREVIOUS 367,000) "

Matthew Graham : "RTRS - GREEK POLITICAL LEADERS AGREE DEAL ON AUSTERITY MEASURES WITH EU/IMF LENDERS - GOVT SOURCE "

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The Day Ahead: Digesting Greek Headlines and Week's Last Auction

Matthew Graham — Thu, 09 Feb 2012 13:07:00 GMT

As it turns out, the reason we’d heard about the meeting of Greek officials and the troika starting earlier in the day yestersday while never hearing anything else before domestic markets closed, was that the closed door meeting was going on the entire time. Even though the portion of the meeting with the heads of Greece’s political parties concluded shortly after 5pm (EDT), Prime Minister Lucas Papademos said that additional issues needed to be worked on immediately so a deal could be reached ahead of Thursdays Eurogroup meeting. EU/IMF Officials weren’t seen emerging from his office until 10:50pm, almost 6 hours later. Here are a few of the relevant Reuters wires ranging from 5pm-11pm:

· RTRS - GREEK PARTY CHIEFS' MEETING ON EU/IMF BAILOUT CONCLUDES - STATE TV

· RTRS - GREEK PM SAYS ONE REMAINING ISSUE REQUIRES FURTHER WORK AND DISCUSSION WITH TROIKA

· RTRS - GREEK PM SAYS DISCUSSIONS WITH TROIKA TO CONTINUE RIGHT NOW SO DEAL CAN BE CONCLUDED AHEAD OF EUROGROUP MEETING THURSDAY

· RTRS - GREEK POLITICAL LEADERS TO MEET AGAIN ON THURSDAY TO RESOLVE REMAINING ISSUE - PARTY OFFICIAL

· RTRS - SUPPLEMENTARY PENSIONS REMAIN ONLY STICKING POINT IN GREEK BAILOUT TALKS - PARTY OFFICIAL

· RTRS - GREEK PARTY LEADERS AGREE MINIMUM WAGE LEVEL TO BE CUT BY 22 PCT - SOCIALIST PARTY SPOKESMAN

· RTRS - GREEK PARTY LEADERS AGREE NOT TO SCRAP HOLIDAY BONUSES - SOCIALIST PARTY SPOKESMAN

· RTRS - GREEK GOVT OFFICIAL SAYS WE HAVE NO CHOICE BUT TO FINALIZE DEAL TONIGHT

· RTRS – 10:50 PM EDT - EU/IMF OFFICIALS LEAVE GREEK PM'S OFFICE AFTER TALKS ON BAILOUT-REUTERS WITNESS

· RTRS – 10:58 PM EDT - GREEK FINMIN VENIZELOS SAYS ONE ISSUE ON BAILOUT DEAL HASN'T BEEN SETTLED YET

Note in particular that all points except one—supplementary pensions—were resolved. Then note that Papademos said in December that “unless the system of supplementary pensions is reformed by mid-January, the country will have fiscal evaluation problems with the troika.” (full story)

Yeah… We don’t know what to say about that either…

Suffice it to say that things have been, still are, and probably will continue to be a mess when it comes to getting Greece “sorted-out.” As time goes by, we get the impression that markets are caring less and less about the short term headlines and are more interested in longer term adjustments based on longer-term progress.

But “less interested” doesn’t mean “not interested” in this case. Apparently the fact that there’s only one sticking point left in the negotiations is good thing, or at least Treasuries traded it that way after the bulk of the dust settled, having risen back well-over 2% shortly after the last newswire above and are slightly higher in the first few minutes of domestic trading at 2.2027. MBS are miraculously 1 tick higher at 103-27 in Fannie 3.5's.

In addition to the ongoing headline potential out of Greece, we get our first real economic data of the week as well as the last real Treasury auction. The data hits at 8:30am and 10:00am with Jobless Claims and Wholesale Inventories respectively. Then at 1pm, Treasury will auction $16 bln in new 30yr Bonds. Data, and to a greater extent, the auction are perfectly entitled to move markets today, but their ability to do so could rapidly erode with the emergence of potent enough headlines out of Greece.

What will be truly telling is the market’s reaction to either a best-case or worst-case scenario. Given our assertion above that markets seem to be caring less about the short term and more about the long term, if the current bailout negotiations end up fully resolved and in the best possible way, if 10yr yields do not then break 2.09/2.10-ish, then it’s basically a bounce within the broader range and in the big picture, really nothing to write home about (though it would certainly be unpleasant in the short term). If there’s catastrophic failure and 10’s stay above say 1.95, again, non issue.

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MBS RECAP: 2/8/2012

Matthew Graham — Wed, 08 Feb 2012 21:17:31 GMT

MBS Live: MBS RECAP

Open MBS Live Dashboard

FNMA 3.5
103-28 : +0-04

FNMA 4.0
105-21 : +0-02

FNMA 4.5
106-25 : +0-01

FNMA 5.0
108-01 : +0-01

GNMA 3.5
105-08 : +0-02

GNMA 4.0
107-32 : +0-03

GNMA 4.5
109-09 : +0-03

GNMA 5.0
110-31 : +0-02

FHLMC 3.5
103-18 : +0-05

FHLMC 4.0
105-07 : +0-01

FHLMC 4.5
106-08 : +0-02

FHLMC 5.0
107-24 : +0-03

Pricing as of 4:04 PM EST

Afternoon Market Updates

A recap of MBS Market Updates provided by MND Analysts and streamed live to the MBS Live Dashboard.

1:28PM : ALERT: Limited Reaction to Good-But-Not-Great 10yr Auction

Bond markets have reacted in a generally positive way to today's 10yr note auction. The high-yield awarded was 1.1 bps lower than "when-issued" yields just before the release (this is bond-market friendly as it means that yields were slightly lower than the street was expecting) and the bid-to-cover of 3.05 was very close to its historical average of 3.02.

This is good to see considering the headwinds facing bond markets today, including the seemingly endless uncertainty as to the eventual outcome of Greece's bailout negotiations. Earlier today, markets began pricing in news that the ECB would conspire with the EFSF to effectively reduce Greece's debt load without the ECB technically being the one to pull the trigger. 10yr yields rose above 1.99% several times after that news initially hit, but pulled back later in the morning after the ECB said it was as yet, undecided on its participation in the Greek bailout.

Following the auction, 10yr yields moved down from 1.99 to 1.975m and MBS held onto a supportive trend of higher low’s from yesterday afternoon to move from 103-24 before the auction to 103-26 currently.

All told, these moves are fairly limited in magnitude, but we wouldn’t expect traders to want to overcommit in either direction at the moment considering the multiple possible outcomes of the Greece situation, not to mention one more significant auction to go (tomorrow’s 30yr bond). In fact, given those headwinds, we’re pleased that things have held up as well. The current positivity may not be enough for additional likelihood of positive reprices, but it remains a possibility for some.

12:54PM : New York Fed Sells $6.2 Billion in Face Amount of Maiden Lane II LLC Assets

The Federal Reserve Bank of New York ("New York Fed") today announced that it has sold assets with a current face value of $6.2 billion from its Maiden Lane II LLC ("ML II") portfolio through a competitive process to Goldman Sachs & Co. Proceeds from this sale and the January 19, 2012 transaction, will enable the repayment of the entire remaining outstanding balance of the senior loan from the New York Fed to ML II on the next payment date in early March. The original amount of the senior loan was $19.5 billion.

The transaction was prompted by an unsolicited offer from Credit Suisse Securities (USA) LLC to BlackRock Solutions, the investment manager for ML II, to buy ML II assets. Consistent with its March 2011 announcement regarding the disposition procedures for ML II, which allowed for these types of reverse inquiries, the New York Fed directed BlackRock Solutions to conduct a sale via a competitive process. The five broker-dealers included in the competitive process were Barclays Capital Inc., Credit Suisse Securities (USA) LLC, Goldman Sachs & Co., Morgan Stanley & Co. LLC, and RBS Securities Inc. The broker-dealers were selected based on the strength of each of their recently submitted reverse inquiries for large parcels of the portfolio.

The New York Fed decided to move forward with the transaction only after determining that the winning bid represented good value for the public. Net proceeds from the sale will be reported as part of the portfolio’s normal reporting schedule on April 16, 2012.

William C. Dudley, President of the New York Fed, said, "I am pleased with the continued interest in these assets and am especially gratified that the New York Fed's loan to ML II will be repaid as a result of the sale announced today."

11:28AM : ALERT: MBS At Highs After ECB Says Greek Restructuring Participation Undecided

RTRS- ECB NOT YET DECIDED ON WHETHER TO CONTRIBUTE TO GREEK DEBT RESTRUCTURING - EURO ZONE SOURCES

Treasury yields and stock prices are at their lowest levels since yesterday morning and MBS are at their 2-day highs after this news. Fannie 3.5's are up 4 ticks on the day to 103-27. Based on the shape of MBS trading, we could conceive an early lender or two might be thinking about a positive reprice, but are somewhat hesitant based on two important factors.

First, there's the 10yr auction coming up in about an hour and a half. Those have a tendency to exert at least a moderate impact on MBS, and sometimes more. Then there's the very nature of the news.... More back and forth, he said, she said, in again, out again headlines concerning the Greek bailout negotiations. It's not the first time we've seen a brief market movement in response to a headline that's essentially the opposite of other headlines earlier in the day, and it won't be the last.

Markets and mortgage lenders alike are well aware that it won't be the last time, and are probably in agreement that it stands a really good chance of not even being the last time today. What we're all wondering is how many more times will we see headlines like this play ping pong with bond prices and which one of them will ultimately drive trading direction more than the others. Balance that out with the 10yr auction results and there's more uncertainty present than we'd like if we were going to put out reprices.

Bottom line, don't expect broad-based involvement in any potential pre-auction reprices, although it is a possibility, and things are moving in the right direction. Whether or not things continue in that direction should be a lot clearer following the auction, and with more hours passing without a significant tape-bomb of Greek headline.

Featured Market Discussion

A recap of the featured comments from the Live Discussion on the MBS Live Dashboard.

Timothy Baron : "GR, if you enter the MI info correctly into your LOS, your TIL amortization schedule should show you how much the MI goes down every year, until it drops off completely at 78% ltv."

Matt Hodges : "drops every 12 months"

Matt Hodges : "constant each year"

Gaius Rossini : "hey anyone with FHA experience - does the MIP reset? that is, even though the MIP is a constant 1.1% for example, do you pay less each month because the principal is being paid down slowly? Or is it a constant amount of $s until it goes away?"

Matthew Graham : "absolutely. could have been much worse."

Victor Burek : "i'll take that"

Matthew Graham : ""B""

Matthew Graham : "RTRS - US TREASURY - PRIMARY DEALERS TAKE $10.33 BLN OF 10-YEAR NOTES SALE, INDIRECT $9.28 BLN"

Matthew Graham : "RTRS- U.S. 10-YEAR NOTES BID-TO-COVER RATIO 3.05, NON-COMP BIDS $47.32 MLN "

Matthew Graham : "RTRS- U.S. SELLS $24 BLN 10-YEAR NOTES AT HIGH YIELD 2.020 PCT, AWARDS 32.03 PCT OF BIDS AT HIGH "

Kent Mikkola #353976 : "watch out for their ctc... they often add stips after you recieve it"

Kent Mikkola #353976 : "rate appeal and underwriting ease are inversely proportional"

BVG : "clean files BB---and of course patience."

Brent Borcherding : "How is Interbank to work with? We're just signing up with them."

Brent Borcherding : "There are portfolio lenders that allow purchasing in the name of LLC, but not newly created one....i.e. the LLC has to be profitable. JZs is their only possibility."

Alan Craft : "I would go with Zim's advice"

Jason Zimmer : "have to close in individual name and QC to LLC has always been the avenue that i have used."

Jason York : "anyone dealt with someone trying to buy their first investment property and using an LLC they are jsut now creating?"

MMNJ : "REPRICE: 11:40 AM - Provident Funding Better"

Matthew Graham : "RTRS- ECB NOT YET DECIDED ON WHETHER TO CONTRIBUTE TO GREEK DEBT RESTRUCTURING - EURO ZONE SOURCES "

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Mortgage Rates Flat to Slightly Improved After Auction, Greece News

Matthew Graham — Wed, 08 Feb 2012 20:10:00 GMT

For several sessions in a row, Mortgages Rates have moved in the opposite direction from the previous session, although even the bigger examples of these movements haven't been enough to nudge 3.875% out of the "best-execution" position. The same back-and-forth movement continued today as rates improved ever so slightly after rising slightly yesterday. Keep in mind, that the term "rates" in this context refers to the combination of the interest rate itself and the closing/borrowing costs required to obtain that rate. We explain more about Best-Execution calculations in THIS POST.

Also in the same vein as yesterday, today's market movement began in reaction to headlines surrounding Greece's ongoing negotiations with creditors (the 3 official creditors, the ECB, IMF, and European Commission are collectively referred to as "The Troika") regarding current bailout efforts. The circulation of a draft agreement of the Troika's terms, which was delayed yesterday, was quickly forgotten this morning after news broke that the ECB might work a 3-way deal between Greece and the EFSF (which is the EU "Bailout Fund," sort of like TARP was to the US), that would ultimately leave Greece with €11 billion less debt, while the ECB would walk away having stuck to their guns and the EFSF would foot the bill. If all that stuff sounds confusing, that's because it is. It's also, unfortunately, one of, if not THE biggest source of movement for mortgage rates in the US. Good times...

The US 10yr Treasury Auction was also an important event from today, and it didn't seem to indicate a great deal of optimism that that current goings on in Europe would do anything to fundamentally alter the very scary bigger picture. The reason we say that is because there were more than three dollars bid for each of the $24 billion auctioned today, slightly higher than the historical average, and those bids were satisfied earning as little as 2.02% on 10yr loans to the US Government. That's just not the sort of thing that has ever happened until markets became increasingly concerned about a Euro-Zone meltdown.

The generally low Treasury yields provide an ideal environment for generally low Mortgage Rates, though we're fond of reiterating that Mortgage Rates are not based on Treasuries. Although Treasuries and MBS (the "mortgage-backed-securities" that most directly govern rates) are often moving in the same direction, the magnitudes of that movement can vary, and sometimes, they can move in different directions. The trading day isn't over yet, but at several times today, MBS have been lower in yield while Treasuries have been higher, thus the slightly improved mortgage rates.

Today's BEST-EXECUTION Rates

30YR FIXED - 3.875% mostly, few 3.75's and 4.0's
FHA/VA -3.75%
15 YEAR FIXED - 3.25%
5 YEAR ARMS - 2.625-3.25% depending on the lender

Ongoing Lock/Float Considerations

Rates and costs continue to operate near all time best levels
Current levels have experienced increasing resistance in improving much from here
There are technical reasons for that as well as fundamental reasons
Lenders tend to get busier when rates are in this "high 3's" level and can throttle their inbound volume by raising rates or costs.
While we don't necessarily think rates are destined to go higher, given the above facts, there seems to be more risk than reward regarding floating
But that will always be the case when rates operating near historic lows
(As always, please keep in mind that our talk of Best-Execution always pertains to a completely ideal scenario. There can be all sorts of reasons that your quoted rate would not be the same as our average rates, and in those cases, assuming you're following along on a day to day basis, simply use the Best-Ex levels we quote as a baseline to track potential movement in your quoted rate).

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Bond Markets Improve Following 10yr Auction and Fed Selling

Matthew Graham — Wed, 08 Feb 2012 19:01:00 GMT

After the 10yr auction, production MBS and the long end of the yield curve didn't move much at first. But it now seems that some additional bid for the 10yr was on hold until after the Fed's Scheduled selling that ended at 2pm. As that was wrapping up, 10's made another move lower in yield to test the the pivot point just over 1.96% that can be seen in the chart below. First, here's the full text of the MBS Live alert that went out after the auction:

Limited Reaction to Good-But-Not-Great 10yr Auction (1:28PM)

Bond markets have reacted in a generally positive way to today's 10yr note auction. The high-yield awarded was 1.1 bps lower than "when-issued" yields just before the release (this is bond-market friendly as it means that yields were slightly lower than the street was expecting) and the bid-to-cover of 3.05 was very close to its historical average of 3.02.

This is good to see considering the headwinds facing bond markets today, including the seemingly endless uncertainty as to the eventual outcome of Greece's bailout negotiations. Earlier today, markets began pricing in news that the ECB would conspire with the EFSF to effectively reduce Greece's debt load without the ECB technically being the one to pull the trigger. 10yr yields rose above 1.99% several times after that news initially hit, but pulled back later in the morning after the ECB said it was as yet, undecided on its participation in the Greek bailout.

Following the auction, 10yr yields moved down from 1.99 to 1.975m and MBS held onto a supportive trend of higher low's from yesterday afternoon to move from 103-24 before the auction to 103-26 currently.

All told, these moves are fairly limited in magnitude, but we wouldn't expect traders to want to overcommit in either direction at the moment considering the multiple possible outcomes of the Greece situation, not to mention one more significant auction to go (tomorrow's 30yr bond). In fact, given those headwinds, we're pleased that things have held up as well. The current positivity may not be enough for additional likelihood of positive reprices, but it remains a possibility for some.

In the bigger picture, hitting resistance in the 1.96's is a bit troublesome for 10yr yields considering this was a recently broken on the latest round of optimism over Greece's bailout negotiations. It's not the be all, end all technical level, but as long as yields continue to hold above it, a sideways trend is reinforced, as opposed to the bullish (descending yield) trend that was just broken. "Sideways around 2%?" That sounds fine to us, but the risk is that confirming this sideways trend could be the first step in a shift to an uptrend. But for now, that discussion is premature. We'd need to see higher pivots (2.04 and 2.09) broken before considering a broader shift, and like many market participants, would greatly appreciate the opportunity to hear just what the heck the real outcome will be for the Greece negotiations as well as tomorrow's 30yr bond auction. At least in the case of the latter, we know that it will happen tomorrow, whereas a more significant resolution for Greece is anyone's guess.

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MBS MID-DAY: 2/8/2012

Matthew Graham — Wed, 08 Feb 2012 16:17:24 GMT

MBS Live: MBS MID-DAY

Open MBS Live Dashboard

FNMA 3.5
103-26 : +0-03

FNMA 4.0
105-20 : +0-01

FNMA 4.5
106-23 : -0-01

FNMA 5.0
108-00 : -0-01

GNMA 3.5
105-09 : +0-03

GNMA 4.0
107-31 : +0-02

GNMA 4.5
109-06 : +0-00

GNMA 5.0
110-30 : +0-00

FHLMC 3.5
103-16 : +0-02

FHLMC 4.0
105-03 : -0-03

FHLMC 4.5
106-04 : -0-02

FHLMC 5.0
107-22 : +0-01

Pricing as of 11:03 AM EST

Morning Market Updates

A recap of MBS Market Updates provided by MND Analysts and streamed live to the MBS Live Dashboard.

9:46AM : ALERT: Bond Markets Bounce Back To Breakeven Levels After Overnight Weakness

News that the ECB would turn over it's Greek bond holdings to the EFSF in exchange for EFSF bonds of higher amounts, provides another potential reason that yesterday’s planned meeting among Greek leaders to approve the terms of the bailout was postponed.

This ECB/EFSF news is important, but not game-changing. It's basically a crafty way for the ECB to get around their previous misgivings about more direct involvement. They're "working the system," as it were, essentially giving Greece the break it was looking for without a haircut to their own holdings (because a haircut would have amounted to the 'direct injection' that they're so opposed to) and the EFSF pays the difference. It doesn't seem like markets have considered that this further taps the EFSF's resources, meaning they'll either need more money, more leverage, or simply have less to lend to Portugal in a few weeks when that shoe drops.

Perhaps the default weakness overnight had more to do with the fact that the ECB/EFSF deal is a tacit confirmation that the Greek bailout deal is probably mostly resolved. The ECB probably would not have gotten in bed with the EFSF on this if that were not the case because it would embolden the private sector investors to demand a better deal ("Oh! if the ECB is involved now, I want less of a haircut!").

News that German parliament would vote on all this next week as well as other facets of Greece’s balout has done much to temper the overnight bearishness in bond markets, actually bringing MBS back into the green, currently up a tick at 103-25. 10yr TSYs haven’t quite broken even yet, but are only 1bp higher on the day at 1.9875. With the auction coming up later today, we wouldn’t be surprised to see 10’s continue to be a bit weaker than MBS, and perhaps slightly weaker in general by way of building a bigger concession.

8:30AM : MBA: Refinance Activity Increases as Rates Hit Survey Lows

Mortgage applications increased 7.5 percent from one week earlier, according to data from the Mortgage Bankers Association's (MBA) Weekly Mortgage Applications Survey for the week ending February 3, 2012.

The Market Composite Index, a measure of mortgage loan application volume, increased 7.5 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index increased 8.7 percent compared with the previous week. The Refinance Index increased 9.4 percent from the previous week. The seasonally adjusted Purchase Index increased 0.1 percent from one week earlier. The unadjusted Purchase Index increased 6 percent compared with the previous week and was 4.1 percent lower than the same week one year ago...

Featured Market Discussion

A recap of the featured comments from the Live Discussion on the MBS Live Dashboard.

Matthew Graham : "RTRS - WILLIAMS-FED'S 'BEST JUDGMENT' IS FOR RATES TO STAY LOW THROUGH LATE 2014; NOT A PROMISE "

Matthew Graham : "RTRS- WILLIAMS - IF FED NEEDS TO DO MORE, BEST WAY IS TO RESTART PURCHASES OF MORTGAGE-BACKED SECURITIES "

Matthew Graham : "RTRS - FED'S WILLIAMS-MAY NEED MORE POLICY ACCOMMODATION IF ECONOMY LOSES MOMENTUM OR INFLATION STAYS WELL BELOW 2 PCT "

Kent Mikkola #353976 : "Debt/Income Ratio Above 41% on Prior Approval Loan IF on a prior approval loan: * The ratio of total monthly debt payments to gross monthly income is greater than 41 percent (unless it is over 41% solely due to tax-free income - which should be noted in the loan file) AND * Residual income does not exceed the established guidelines by at least 20 percent (Always compute this residual income ratio regardless of the amount of residual income) THEN The loan specialist must provide a statement in "

Alan Craft : "41 Yorkie"

Jason York : "for a manual UW on a VA loan, what are the max DTI ratios, or are you allowed to go up to 120% residual income?"

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