MBS RECAP: Still Calm; Storm Still Begins Tomorrow

We have it on good authority that tomorrow is Wednesday and that there's a lot of "stuff" going on that bond markets might care about.  That includes the bright-and-early ADP Employment Report, the first look at Q2 GDP 15 minutes later along with Treasury's quarterly refunding announcement, the FOMC Announcement at 2pm, and the pervasive reality that it's "month-end," which adds another layer of complexity to all of the above as money managers are forced to match positions to various indices (creating 'phantom forces' that move markets without being easily attributed to overt headlines/events).  Phew!  That's a lot of stuff.  Combine that with the fact that it could all be magnified, neutralized, or overpowered by Friday's big jobs report and you have all the ingredients for today's main dish: an exceptionally bland and flavorless bowl of anticipation, slid skillfully sideways across the countertop where we await the real news--the main dish(es)--tomorrow. 

MBS Pricing Snapshot

Pricing shown below is delayed, please note the timestamp at the bottom. Real time pricing is available via MBS Live.

Pricing as of 4:05 PM EST

Afternoon Reprice Alerts and Updates

Below is a recap of instant Reprice Alerts and updates issued via email and text alert to MBS Live subscribers this afternoon.

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3:17PM  :  Bouncing Back After Hours; Reprice Risk Shifts

After the 3pm Treasury "close," bond markets are bounce back somewhat. 10yr Treasuries are back to unchanged levels just under 2.60, Fannie 3.5s are down only 1 tick on the day at 100-23 and Fannie 4.0s are down 2 ticks at 103-25. Both MBS coupons are more than 4 ticks off previous lows and have been doing a decent job of holding ground during this token intraday recovery.

Whether or not this means that some faster-acting lenders will reprice positively remains to be seen, but it does likely relieve most negative reprice risk from all but the slowest responders.

12:51PM  :  ALERT ISSUED: Reprices Incrementally More Likely as Losses Hold

Although the broader range is far from threatening, the near-term movements in MBS increase the risks of negative reprices. Fannie 3.5s are now down 5 on the day at 100-19 and 4.0s are down 3 at 103-24. Most lenders will reprice if prices hold here or move lower. Of potential note: there's still nothing by way of news or data driving these changes--simply low volume/light-liquidity trading and positioning ahead of tomorrow's epic batch of potential market movers. In other words, there's nothing much of consequence happening right now except for lenders' rate sheets.

12:04PM  :  ALERT ISSUED: Negative Reprice Risk Increasing as MBS Hit Lows

While Fannie 4.0s have been able to hold their ground to a better extent, Fannie 3.5s are now at lows of the day, up 2 ticks at 100-25. There's no significant news or event driving the weakness, but it is enough to increase negative reprice risk for most lenders.

11:05AM  :  Treasuries, MBS Hit Resistance As Fed Buying Winds Down

Just a heads-up about a potential shift in tone, or at least a "leveling-off." While this could turn right around and prove to be harmless, the concern at the moment is that Treasuries and MBS have both hit resistance levels, and were unable to break through on the slightly weaker Consumer Confidence numbers.

For Treasuries, the resistance floor is just over 2.57 and is shared with yesterday morning's resistance bounce just before 11am. MBS are running into ceilings from Friday afternoon with Fannie 3.5s topping out at 100-31 and 4.0s at 103-30. Neither are more than 4 ticks from those highs, keeping negative reprice risk at bay for now.

Bottom line, today's range is tight so far, and stands a decent chance of drifting to test it's higher or lower bound. The latter scenario could introduce reprice risk. If Fannie 3.5s break below 100-27 or 4.0s below 103-26, negative reprice risk would be ramping up. There are some supportive pivot points for 10yr yields just overhead so the verdict isn't quite in yet.

Live Chat Featured Comments

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Eric Franson  :  "REPRICE: 1:33 PM - Wells Fargo Worse"

Derek Nadvornick  :  "Every case is different. A young family starting off in a 1200 sq ft ranch mat be better off with an arm. They won't be there 30 years."

Scott Rieke  :  "No rush to pay it off. If inflation does kick in, I will definitely love that rate."

Scott Rieke  :  "That's the duration of most loans -- 7-8yrs. But things may have changed. I'll think twice about moving in 7yrs and leaving behind a 3.125% fixed on jumbo."

Derek Nadvornick  :  "I personally have a 10/1 ARM. I'll pay $13,000 less interest over the fixed term vs a 30 yr fix. I tell my clients that and let them look at the numbers to decide for themselves. 7 and 10 years = long time."

Matthew Carver  :  "REPRICE: 1:12 PM - Sierra Pacific Worse"

Joe Daquino  :  "There is nothing wrong with ARM's, I would never advise against them. In the high end market, ARM's are the standard. Guy with a $1.5 million + loan rarely ever has a fixed loan. "

JRS  :  "REPRICE: 1:05 PM - Suntrust Worse"

Tom Schwab  :  "REPRICE: 1:03 PM - AMC Worse"

Bryce Schetselaar  :  "REPRICE: 1:00 PM - Caliber Funding Worse"

Eric Lao  :  "REPRICE: 12:56 PM - Flagstar Worse"

Tom Bartlett  :  "-4 ticks just looks bad on the current chart but it is only 4 ticks worse currently."

Matthew Graham  :  "everyone pretty much has their seats staked out for tomorrow's parade of data, so any adjustments along the side of the road now become extra noticeable. "

Matthew Graham  :  "nothing "happened." Things look dramatic because of the narrow 2-day range and swings are exacerbated by lack of liquidity "

David Rudnick  :  "whoa... what just happnened!"

Rob Clark  :  "REPRICE: 12:33 PM - Provident Funding Worse"

Andy Pada  :  "I guess one can make the argument that it hasn't accomplished that purpose."

Victor Burek  :  "the purpose is to spur economic growth"

Andy Pada  :  "I know this is academic, but I think we have to ask what is the purpose of QE? And from there, we can opine as to whether tapering should occur."

Victor Burek  :  "sure hope so"

David Rudnick  :  "isnt tapering already priced into the rates?"

Andy Pada  :  "some guy on CNBC just said that the Treasury's reduction in treasuries will result in the Fed buying a higher % even with a taper."

Victor Burek  :  "higher rates are definitely stalling housing"

Rob Clark  :  "If they taper and the economy stalls it will be a lot more difficult to get it going again."

Rob Clark  :  "I am sure that is one thing they are talking about. How to be more clear. At least I hope so."

Victor Burek  :  "they sure haven't sent a clear message"

Andy Pada  :  "I guess my query is this: if an adjustment on asset purchases is based on more positive economic, in particular, employment and inflation, data, we haven't really "hit the marks" for any tapering. I get the Fed's concept, I'm just not understanding the application."

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MBS RECAP: Week Begins Calmly Before Impending Storm

It's no secret by now that Wednesday through Friday of this week bring an exceptionally heavy load of economic data and events, collectively carrying the potential to move markets as much as they've moved in recent memory.  It's also commonly known that Wednesday is the day after tomorrow.  As such, markets are taking their sweet time ramping up activity levels with today's session being almost entirely a 'dud.'  There was mild movement in MBS, but the range was exceptionally small and no lender reprices were reported.  Pending Home Sales did little to motivate any noticeable movement, but perhaps helped trading levels stay range-bound as it suggested rising rates are indeed taking a toll on the housing market (not "new news" in that sense, but another piece of evidence to add to a recently growing body).  After that data, the day was essentially done.  MBS dipped slightly into the 1pm hour as Treasuries came under some pressure from corporate rate-lock selling, but held ground at the lows and returned to near-unchanged levels into the final hour.

MBS Pricing Snapshot

Pricing shown below is delayed, please note the timestamp at the bottom. Real time pricing is available via MBS Live.

Pricing as of 4:04 PM EST

Afternoon Reprice Alerts and Updates

Below is a recap of instant Reprice Alerts and updates issued via email and text alert to MBS Live subscribers this afternoon.

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3:15PM  :  More on Earlier Bout of Weakness: Corporate Credit Markets

We've discussed "corporate rate-lock selling" in the past as a source of Treasury-specific pressure. This occurs when a firm is issuing a corporate bond (taking in investment that they'll then make payments on at a rate that usually involves a benchmark like 10yr Treasuries + a margin. In a fixed rate offering, the firm may "lock in" its cost of funding by selling Treasuries.

This means they've given up the right to earn today's interest rates in exchange for cash. If prices fall and rates move higher between the time their bond offering is priced and the time it's fully subscribed , they'll have already sold at the price highs, offsetting any fall in prices and effectively "locking in" the rate at which they'll be repaying the investors in their newly issued offering.

Here's more from Reuters on today's potential rate-lock selling. (This weakness has mostly worked it's way through the market and MBS are back near unchanged levels):

(Reuters) - Prices of U.S. Treasuries slipped on Monday as corporate issuers launched deals to try to lock in rates ahead of this week's Federal Reserve policy statement and key U.S. employment report, traders said.

Dan Heckman, senior fixed income strategist at U.S. Bank Wealth Management in Kansas, Missouri, said the market would likely trade "in a pretty tight range" unless Friday's employment report "is incredibly weak" and persuades market participants that the Fed won't begin to cut back on its bond purchases until December."

Currently, many participants believe the U.S. central bank will begin to trim the bond purchases that partly comprise its quantitative easing policy in September.

Energy names dominated the U.S. high-grade primary market on Monday in a week estimated to see $15 billion to $20 billion in corporate issuance. Most of the deals are expected to get done before the Fed's policy announcement on Wednesday and the jobs number on Friday, said IFR, a Thomson Reuters company.

1:17PM  :  ALERT ISSUED: Selling Pressure and Negative Reprice Risk Increasing

Treasuries are leading a charge into weaker territory for MBS. While 10yr yields are well into their highs of the day now at 2.602, Fannie 3.5 and 4.0 MBS are just now falling in line with their low prices on the day. There is not enough of a gap in prices between rate sheet print times and current levels to justify reprice risk for most lenders, but some might be getting close if we hold here or move any lower.

Fannie 4.0s are 3 ticks off their highs at 103-25+ and Fannie 3.5s are 5 ticks off their highs at 100-23.

Live Chat Featured Comments

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Matt Hodges  :  "i don't think the Fed knows the number"

Scott Rieke  :  "I can understand the WH getting it the night before... but a few days. I don't know."

William Packer  :  "I would imagine the fed already knows the number"

Scott Rieke  :  "no doubt - quiet before the storm. I still find it odd the Fed is releasing a decision BEFORE NFP. That's how the calendar plays out, I know. But imagine the number doesn't remotely support their arguments, one way or another. Unless they are already privvy... which they may be. I don't know the timing on that"

William Packer  :  "wednesday - friday should be a lot more interesting"

William Packer  :  "kind of a boring day today in the mbs markets"

Caroline Roy  :  "genworth seems fine. it is UGI that is tricky"

Roger Moore  :  "is Genworth typically one of the MI companies not supported by most lenders under HARP?"

Bert Swyers  :  "one thing we know for sure is rates will move quickly"

Bryce Schetselaar  :  "It could be a really good or really bad "

Bryce Schetselaar  :  "I was just looking at it and thinking the same thing Bert"

Bert Swyers  :  "that econ calendar is pretty crazy this week, make or break week for rates I think"

Matthew Graham  :  "np. Pretty well-balanced too. Probably more being originated into 4.0s but anything 4.125 and under has to go into 3.5s and 4.25% can as well, but can also go into 4.0s."

Matthew Graham  :  "Both matter at the moment."

Nate Miller  :  "does secondary currently put more weight on the fannie 3.5 for potential reprices? are 4.0's factored in also?"

Alan Craft  :  "Plug in the state and county here https://entp.hud.gov/idapp/html/hicost1.cfm"

Daniel Kramer  :  "ok, thanks. I have a potential borrower in Ulster County, NY and he wants 95% to 445k loan. I tol dhim max is 417k to 87% based on purchase price."

Matt Hodges  :  "county loan limits restrict FHA loan sizes"

Daniel Kramer  :  "FHA question, if the max loan limit for a county is less than 417k, does that mean a borrower cant get a FHA 30 yr fixed loan for 417k? "

Hugh W. Page  :  "You're right. QE continues. Any significant reduction in QE beyond reduction in debt has a high likelihood of crashing the market IMO."

Victor Burek  :  "like if supply drops 10%, they reduce 10%"

John Tassios  :  "you never know how the bond market will react once tapering starts, we saw a glimpse of it already in May and June"

Victor Burek  :  "I still think fed wont taper in Sept, but if they do, it will be somehow tied to the lower new debt issuance"

Victor Burek  :  "quite possibly, it would be like they are buying the same share"

Andy Pada  :  "so what would it mean if the the supply is roughly $20B less per month. Does this take the sting out of any taper?"

Victor Burek  :  "I think the auction sizes were the same last quarter and this quarter"

Andy Pada  :  "seems like the Treasury did not issue a lot of debt (relatively) in the second quarter. Am I reading that correctly?"

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Mortgage Rates Bounce Back to Week's Lows

Mortgage rates were lower today right out of the gate, continuing a move set in motion by comments from Fed Chairman Bernanke late in yesterday's session.  Markets didn't have much time to react, but showed early hints at today's strength in overnight trading.  Some mid-day volatility forced a few lenders to adjust rates higher, but once it was resolved, even more lenders adjusted rates lower before the end of the day.  The net effect is a 30yr fixed best-execution rate that's more convincingly down in the 4.625% range, whereas some lenders were arguably near 4.75% yesterday.

Mortgage rate movement can be measured in two ways.  Of course we can examine changes in the actual rate (which we extrapolate on our "mortgage rates" page), but lenders typically offer rates in increments of 0.125% or "an eighth."  The balance of day to day (and sometimes hour to hour) movement occurs in "cost."  This can refer to the upfront costs associated with buying down a rate or the amount of cash back otherwise received at closing.  Today was one of those days where the movement was almost enough to simply say "rates dropped an eighth," but not quite.  As such, the reference to 4.75% yesterday versus 4.625% today doesn't mean rates are simply an eighth lower, but it may have made a move down in rate affordable to the point that it's worth the cost.  Your lender will generally have the option to show you how adjacent rates will affect your upfront costs.

In considering what lies ahead, it's worth noting that today's rates are the lowest in a week.  There haven't been too many occasions where we've been able to say that in the last 2 and a half months that have NOT resulted in higher rates in the following week.  Tomorrow is very much up in the air.  Markets could choose to key in on economic data or could continue to draw inspiration from Bernanke's comments (and hold out hope that his speeches next week will be similarly helpful.  There's the important Retail Sales report on Monday morning as well which may prevent rates from getting too low as market participants look to stay nimble ahead of the data.

Loan Originator Perspectives

"Sunny day in MBS Land as we overcame mid day weakness to rally about 1/2% in pricing as of mid PM. While we're still down from mid June's levels, at least the red ink is off the board for moment and Bernanke press conference and Fed minutes are out of the way. Hopefully we'll see some stability and/or continued gains!" -Ted Rood, Senior Originator, Wintrust Mortgage

"In this current market, there is no shame in locking in the gains when you get them. As we've seen, what's here today, could be gone tomorrow." -Jason York, VP of VA Operations, Prime Mortgage Lending, Inc

"We received some positive information from Ben Bernanke last night, which in my opinion makes tapering less likely in September. It should have also relieved fears of a rate hike anytime in 2014. Both of these should hopefully lead to mortgage rates improving, which leads me to favor floating today." -Victor Burek, Open Mortgage

Today's Best-Execution Rates

• 30YR FIXED - 4.625%
• FHA/VA - 4.25%  -4.75% (depending on lender buy-down structure)
  
• 15 YEAR FIXED -  3.75%
  
• 5 YEAR ARMS -  3.0-3.375% depending on the lender

Ongoing Lock/Float Considerations

• After rising consistently from all-time lows in September and October 2012, rates challenged the long term trend higher, but failed to sustain a breakout
• Uncertainty over the Fed's bond-buying plans is causing immense volatility in rates markets and generally leading rates quickly higher
  
• Fears about the Fed's bond-buying intentions were proven well-founded on May 22nd when rates rose to 1yr highs after the Fed indicated their intention to taper bond buying programs sooner vs later
• The June 19th FOMC Statement and Press Conference confirmed the suspicions.  Although tapering wasn't announced, the Fed made no move to counter the notion that they will decrease bond buying soon if the economic trajectory continues
• Rates Markets "broke down" following that, as traders realized just how much buy-in there was to the ongoing presence of QE.  These convulsions led to one of the fastest moves higher in the history of mortgage rates and market participants have not been eager to be the among the first explorers to head back into lower rate territory until they're sure they'll have some company.
• (As always, please keep in mind that our Best-Execution rate always pertains to a completely ideal scenario.  There are many reasons a quoted rate may differ from 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).

Mortgage Rates Continue Lower After Retail Sales Data

Mortgage rates moved lower to start the week, adding on to last week's solid recovery from 2yr highs a week before.  As expected, rates took their most meaningful cue from today's Retail Sales report, which was weaker than forecast.  This was a benefit to Treasuries and MBS (the "mortgage backed securities" that most directly affect rates) even before lenders put out their first rate sheets of the day.  Lenders still aren't very unified in their movement from the previous session's rate sheets, but most improved enough to suggest that 4.5% is now sharing some of the best-execution space with 4.625% for conventional, 30yr fixed loans.  Also of note is that the costs associated with "buying down" a rate from from 4.5 to 4.25% are worth considering.  This makes for much higher closing costs, but on average, those costs are recouped in around 60 months based on today's rate sheets.

In other words, rates would have come out higher this morning if not for the Retail Sales data.  From here, there is plenty of data remaining this week, but none of it is quite as meaningful as Retail Sales.  More important than any of the data is the congressional testimony of Fed Chair Ben Bernanke on Wednesday and Thursday morning (at the House and Senate respectively).  Markets are still looking for clues as to how Fed policy may unfold at the end of the month.  The intervening time presents an opportunity for rates to consolidate after hitting recent highs, but it's important to note that there are still ups and downs in the context of consolidation.  The last 3 sessions have been "downs" in terms of rates, and until rates are definitively doing something other than consolidating in the big picture, 3 winning days in a row have been hard to come by.

Loan Originator Perspectives

"Seems the pendulum has swung back in MBS' favor after several sound days, including today's gains. Low inflation data and expectations have tempered the market's tapering concerns, and while I don't anticipate us regaining all the losses of last two months, at least we're moving in the right direction. Advising new clients that floating cautiously is not a horrific idea, and believe me, that's a big sentiment change from last two months!" -Ted Rood, Senior Originator, Wintrust Mortgage

"Let's hope the economic reports keep the positive tone rolling. Rates will benefit from bad or weak numbers. Maybe we can string together a few days of positive gains for rates. Sure would be nice. Locking in the gains is never bad, but floating almost seems to be creeping back into the picture. Always of course with the lock button with in reach." -Mike Owens, Partner, Horizon Financial Inc

"My 2013 of 'lock the rate dips' is applicable right now, ahead of what's almost certain to be volatile rate days Wednesday and Thursday as Fed chairman Bernanke publicly fields questions from lawmakers. Rates spiked severely the last time he publicly fielded questions (from journalists) on June 19. Back then, he said rising home prices compensate for higher rates. His Fed colleagues backpedaled since then but still: more public comments will mean more rate volatility ahead. " -Julian Hebron, Branch Manager, RPM Mortgage

Today's Best-Execution Rates

• 30YR FIXED - 4.50 - 4.625%
• FHA/VA - 4.25%
  
• 15 YEAR FIXED -  3.625 - 3.75%
  
• 5 YEAR ARMS -  3.0-3.375% depending on the lender

Ongoing Lock/Float Considerations

• After rising consistently from all-time lows in September and October 2012, rates challenged the long term trend higher, but failed to sustain a breakout
• Uncertainty over the Fed's bond-buying plans is causing immense volatility in rates markets and generally leading rates quickly higher
  
• Fears about the Fed's bond-buying intentions were proven well-founded on May 22nd when rates rose to 1yr highs after the Fed indicated their intention to taper bond buying programs sooner vs later
• The June 19th FOMC Statement and Press Conference confirmed the suspicions.  Although tapering wasn't announced, the Fed made no move to counter the notion that they will decrease bond buying soon if the economic trajectory continues
• Rates Markets "broke down" following that, as traders realized just how much buy-in there was to the ongoing presence of QE.  These convulsions led to one of the fastest moves higher in the history of mortgage rates and market participants have not been eager to be the among the first explorers to head back into lower rate territory until they're sure they'll have some company.
• (As always, please keep in mind that our Best-Execution rate always pertains to a completely ideal scenario.  There are many reasons a quoted rate may differ from 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).

MBS RECAP: Uneventful End to Uneventful Week

Let's be realistic about markets--bond markets anyway.  Nothing happened this week.  Of course "nothing" sounds a bit dramatic, so let's qualify that just a bit.  Earnings news contributed to fluctuations stocks, but not nearly as much as Europe, illiquidity, and pre-FOMC/NFP positioning.  For instance, the first two days of the week were docile by any standard, both for stocks and bonds.  Wednesday exploded by comparison (but only an explosion relative to the quiet that preceded it).  There seems to be some confusion as to what caused that movement, with the 10AM home sales data getting the credit for Wednesday morning's movement.  Feel free to lean on the following factoid as evidence that this is bogus: 10yr yields had already risen by 9bps by 9am!  2.5049 to 2.5937 to be exact, between 5pm on Tuesday and 9am Wednesday.  The home sales data wouldn't hit for another hour.  Even then, it was a non-event.  Markets moved more sharply following the 5yr auction and the release of the prepared remarks for the Obama speech.  Even that movement was a simple "cash out / cash in" that was washed out of both stocks and bonds in about an hour.  Shocking.

The lion's share of the day's movement ended up being a two-parter that started in Europe with a substantial sell-off in German Bunds.  It's not that we suddenly care about Europe too terribly much again, but any time Bunds sell off 15bps in one session, US Treasuries are going to feel it.  It's hard to say how much of the response in US markets wasn't simply an unwinding of complacency put in place by the low-volume drifting of the previous five sessions.  Stepping back and looking at the bigger picture, we see the only thing that really happened was an ongoing range-trade between 2.46 and 2.62.  Yields had drifted closer to the low end of that range, had occasion to move higher and simply moved back to the other side.  It didn't look certain that the 2.62 ground would hold, but after the week's auction supply needs were taken care of, yields settled back down under 2.6 and went on to an absolutely uneventful session today, locked in the narrowest range of the week, very close to the mid-point of the longer term range. 

Everything points to next week's big events.  Some build-up might be seen for FOMC, but the employment data is the bigger deal (barring a surprise from the Fed).  Whereas we can't be sure that the FOMC Announcement will be a meaningful event, we can be all but guaranteed that NFP will be.  Furthermore, ADP Wednesday morning continues to be a bit more relevant than it used to before the late 2012 methodology change.  A big beat or miss there could get snowball's rolling.  Ultimately, a break of either side of the range would suggest follow through to 2.75 or 2.36. 

MBS Pricing Snapshot

Pricing shown below is delayed, please note the timestamp at the bottom. Real time pricing is available via MBS Live.

Pricing as of 4:05 PM EST

Afternoon Reprice Alerts and Updates

Below is a recap of instant Reprice Alerts and updates issued via email and text alert to MBS Live subscribers this afternoon.

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No Reprice Alerts or Updates Available
Learn More about Reprice Alerts and Updates on MBS Live

Live Chat Featured Comments

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Tim Y  :  "make sure that you have the right borrower on there, sometimes it was on or the other, or another borrower that is not going to be on this app. Had one where the wife assumed it after the husband died. Also, if the address has changed that might be a cause for the look up tool not to work. "

Ted Rood  :  "Look up tool is best option, but have to have exact address as shown on statement."

Bryce Schetselaar  :  "This one doesn't show...That is a good idea a lot of the time. Don't really want him to call servicer and have them steal the deal"

Chris Kopec  :  "Between loan lookup and running DU/LP, you should be able to find out. Might be a portfolio loan if it is with some of the bigger guys."

Ted Rood  :  "Credit reports often show loans as either Fannie or Freddie, but that doesn't necessarily mean HARP eligible."

Adam Karno  :  "Bryce have the customer call the servicer and ask"

Ted Rood  :  "WA Mu was big on option arms and those weren't agency products/harp eligible. Look up tool is usually pretty good."

Bryce Schetselaar  :  "What is the likelihood of a 30 year fixed from Jan 2008 (originated with Washington Mutual) being a fannie or freddie? It is in a large complex and we have not had luck with the loan lookup tools."

Andy Pada  :  "I was just thinking that however bad this punch in the gut has been, we've been through worse and we know how to get to the other side. That being said, let's go green."

Andy Pada  :  "probably misquoting qm"

paul.d.camenzind  :  "I just had a builder call me and said he heard that conforming guidelines were changing 1st of the year to lower maximum dti to 30%. That was news to me, anybody else hear anything like that?"

Andy Pada  :  "Do you guys remember how brutal Q1 2011 originations was?"

Hugh W. Page  :  "That's what I thought . . .he probably doesn't want to come back and try and navigate the unraveling of QE "

Scott Rieke  :  "Yellen definitely isn't someone "new" - uber-dove. Summers would be interesting given his anit-QE comments. "

Victor Burek  :  "but seems Obama wants someone new"

Victor Burek  :  "I have never heard him say he wasn't coming back"

Hugh W. Page  :  "Did the Bernank even announce he is not returning or is it just assumed based on POTUS remarks?"

Victor Burek  :  "Yellen is by far the favorite, according to odds makers"

Rob Clark  :  "CNBC said a few minutes ago the Dems are pushing Obama towards Yellen"

John Toepfer  :  "Hope it's not Summers"

Scott Rieke  :  "Please not Larry"

Matthew Graham  :  "RTRS- NO ANNOUNCEMENT ABOUT FED CHAIR IS IMMINENT, AND LIKELY WON'T COME UNTIL THE FALL - SENIOR WHITE HOUSE OFFICIAL "

Matthew Graham  :  "RTRS- OBAMA HAS NOT MADE A DECISION ABOUT CANDIDATES FOR FEDERAL RESERVE CHAIRMANSHIP - SENIOR WHITE HOUSE OFFICIAL "

Bert Swyers  :  "stocks doing bad"

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MBS RECAP: Late Rally Preserves Range Trade

To be fair, the late rally actually only "further preserved" the range-trade.  The heavy lifting in that regard had already been accomplished by several bounces along supportive levels in both MBS and Treasuries.  In terms of 10yr yields, for instance, the attempt at boundary-breaking took yields over 2.62 on several occasions, but the last bounce was in just after 2pm, well before the afternoon fun began.  The fun in question is the Wall Street Journal's new business model of open market manipulation whereby Hilsenrath writes a Fed policy piece on Thursday or Friday, the week before an FOMC Announcement.  The pieces generally have a detectable slant and markets typically respond in a predictable way.  In this case, the slant was bond market positive, as is plainly evident in the NOW CHANGED headline: "Fed Likely To Consider Refining Easy-Money Message."  Yeah... That may have been a bit suggestive.  WSJ also claimed responsibility for the bond market rally shortly thereafter with the headline "Treasuries Stage Late-day Rise on Fed Policy Hopes."  Talk about efficient journalism... The second article could have been written at the same time as the first, simply saving some space to add in the specific trading level updates.  

MBS Pricing Snapshot

Pricing shown below is delayed, please note the timestamp at the bottom. Real time pricing is available via MBS Live.

Pricing as of 4:04 PM EST

Afternoon Reprice Alerts and Updates

Below is a recap of instant Reprice Alerts and updates issued via email and text alert to MBS Live subscribers this afternoon.

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3:34PM  :  Hilsenrath Headline Adds to Positivity

"At their July 30-31 meeting, Fed officials are likely to discuss whether to refine or revise "forward guidance," the words they use to describe their intentions for the next few years."

The article is all about the short term interest rate equation of Fed policy--NOT asset purchases. But it's the flavor of the moment, so traders aren't swimming against the current.

3:27PM  :  Bond Markets Farther Into Positive Territory After Hours

Both Fannie 3.5s and 4.0s are breaking to new highs on the day as 10yr Treasuries return to challenge 2.59 resistance. Positive reprices are increasingly possible from lenders that haven't come out with them already. Some lenders might be considering a 2nd round. There is no meaningful data or event behind this move. Fannie 3.5s are up 2 ticks at 100-22 and Fannie 4.0s are up 5 ticks at 103-24.

1:16PM  :  Limited Gains After Relatively Strong 7yr Auction

As of right now, we have only a moderate extension of the previous strength following the relatively strong 7-yr Note auction. The demand itself was weaker-than-average, but in line with recent auctions' tendency to see the same. The yield itself was lower than expected by 0.4 bps vs 1pm, which is the most positive aspect.

Even in the time it takes to type, we're already seeing the post-auction positivity sputter out as 10's quickly return to pre-auction levels just over 2.60. This doesn't necessarily mean we're reversing course and heading back toward higher rates, but simply that we're not stampeding toward better levels as a result of the data.

All that having been said, we did see some fairly good gains before the auction and lenders did have to put out rate sheets at lower prices earlier in the day. The longer current levels are held or improved upon, the more likely it is that we'll see a few more lenders think about positive reprices. Conversely, those prospects will diminish if this "sputtering out" follows through into weaker territory.

Bottom line, 11am-1:10pm was good. Next move is uncertain.

12:56PM  :  MBS Bounce Back Convincingly Ahead of Auction

Fannie 4.0s are now in positive territory and Fannie 3.5s are just 3 ticks off. 10yr yields are now just under 2bps higher on the day at 2.60 as the 7yr Auction approaches.

Positive reprices are possible at current levels. The past three 7yr Auctions have stopped through at lower-than-expected yields with less drop-off in bid-to-cover than other issuances. The average over the last 4 has been 2.65 and the last three yield awards were .007, .016, and .006 lower than expected respectively. The auction before that was .008 higher.

The "when issued" yield is where the "expectation" comes from and is currently 2.033, but the actual comparison of the auction will be made vs the 1pm level.

Live Chat Featured Comments

---

Matthew Graham  :  "RTRS- WELLS FARGO-DECISION BASED ON REGULATORY ENVIRONMENT AS CHANGES IN FEDERAL OVERSIGHT HAVE INCREASED COMPLEXITY, DIFFICULTY OF OPERATING MORTGAGE JVS "

Matthew Graham  :  "RTRS - WELLS FARGO SAYS WELLS FARGO VENTURES, UNIT OF WELLS FARGO BANK, N.A., PLANS TO WITHDRAW FROM ITS EIGHT JV IN MORTGAGE LENDING "

Matthew Graham  :  "RTRS - WELLS FARGO & CO WFC.N - NO IMPACTS ON CUSTOMER SERVICE OR LOAN PROCESSING ARE EXPECTED. "

Matthew Graham  :  "RTRS- WELLS FARGO & CO WFC.N - DECISION IS EFFECTIVE IMMEDIATELY AND IS EXPECTED TO BE COMPLETED OVER THE NEXT 12 TO 18 MONTHS "

Matthew Graham  :  "RTRS- WELLS FARGO WITHDRAWS FROM THE MORTGAGE JOINT VENTURE BUSINESS "

Nate Miller  :  "REPRICE: 3:09 PM - Interbank Better"

Victor Burek  :  "PRMG better too"

Rob Clark  :  "REPRICE: 2:43 PM - Pinnacle Better"

Nate Miller  :  "REPRICE - ESSEX better"

Lynn ONeal  :  "REPRICE: 2:10 PM - Franklin American Better"

Eric Franson  :  "REPRICE: 2:01 PM - Wells Fargo Better"

Lynn ONeal  :  "REPRICE: 1:51 PM - Platinum Mortgage Better"

William Hansen  :  "REPRICE: 1:47 PM - NYCB Better"

Nate Miller  :  "REPRICE: 1:43 PM - Homebridge Better"

Michael Owens  :  "REPRICE: 1:42 PM - Real Estate Mortgage Network Better"

---

MBS RECAP: Unpleasant Request to Return to Reality

Today's session has all the trappings of a good, old-fashioned wake-up call.  Here we've been drifting rather pleasantly into positive enough territory to get Fannie 3.5s back into view as a production coupon and in the space of two days, they're almost off the map again (with the exception of top tier buy-down borrowers at 4.25%).  Much more disconcerting than the losses themselves is how they happened.  It's not as if New Home Sales, mediocre 5yr Auctions, and PMI data being moderately better than expected is enough to motivate 8bps of weakness in 10yr yields in any regular market.  Those things look the events of the day, but the bigger story was in tradeflows where volume picked up for the first time in 4 sessions.  US bond markets spent much of their energy chasing a much bigger sell-off in German Bunds.  Bother had technical components with the notable example being 2.46 in 10's.  Though that wasn't in play today, yields were resting there in low volume off and on since the middle of last week.  The pace of today's move higher owes much to the overall rejection of that hugely important technical level.  That it occurred with higher volume simply adds to the ominousness.  Counterpoint: 2.62 was also a technical level and arguably acted as support today, so it's fair to say we're still drifting sideways overall ahead of next week's more important data and that the recent strength merely represented a lower-volume lull in the action.

MBS Pricing Snapshot

Pricing shown below is delayed, please note the timestamp at the bottom. Real time pricing is available via MBS Live.

Pricing as of 4:06 PM EST

Afternoon Reprice Alerts and Updates

Below is a recap of instant Reprice Alerts and updates issued via email and text alert to MBS Live subscribers this afternoon.

---

3:15PM  :  Off Lows and Aiming to Stay That Way Into Close

Given the relatively serious-looking run at the 2.62 inflection point in 10's, and the fact that we're past 3pm, tensions are running lower between now and 5pm. Translation: 10yr Treasuries moved higher, knocked on a well-established ceiling that used to be a well established floor, and couldn't find a way to get upstairs. MBS were reassured by that move and improved with Treasuries back to the morning trading range.)

Fannie 3.5s are 9 ticks off their lows at 100-21. Fannie 4.0s are back up over 103-21, which had been an important supportive ledge. 10yr yields are down to 2.588, which is just on the other side of this morning's upper 2.59 highs. Bottom line, the sell-off has likely run it's course for today.

1:25PM  :  Obama: Home Ownership Clearest Expression of Middle-Class Security

From The President's prepared remarks:

"Now, if a good job and a good education have always been key stepping stones into the middle class, a home of your own has been the clearest expression of middle-class security. That changed during the crisis, when millions of middle-class families saw their home values plummet. Over the past four years, we've helped more responsible homeowners stay in their homes, and today, sales are up, prices are up, and fewer Americans see their homes underwater."

"But we're not done yet. The key now is to encourage homeownership that isn't based on bubbles, but is instead based on a solid foundation, where buyers and lenders play by the same set of rules, rules that are clear, transparent, and fair. Already, I've asked Congress to pass a good, bipartisan idea -- one that was championed by Mitt Romney's economic adviser -- to give every homeowner the chance to refinance their mortgage and save thousands of dollars a year. I'm also acting on my own to cut red tape for responsible families who want to get a mortgage, but the bank says no. And we'll work with both parties to turn the page on Fannie and Freddie, and build a housing finance system that's rock-solid for future generations."

1:12PM  :  ALERT ISSUED: More New Lows for MBS After 5yr Auction; More Reprice Risk

Treasuries have shuffled to slightly higher yields on the day following a somewhat weak 5yr Auction. The auction, in and of itself, may bot be the culprit for the entirety of the movement as technicals were triggered with only moderate selling (not to mention the general snowball selling all day).

10's are now up to 2.61's and Fannie 4.0s and 3.5s are at new lows of the day, increasing negative reprice risk for any lenders how haven't already repriced.

11:23AM  :  ALERT ISSUED: Negative Reprice Risk Increasing as MBS hits new lows.

Both the FNMA 3.5 and 4.0 coupons have fallen to the lows of the day. Negative reprices are possible.

Live Chat Featured Comments

---

Bart Patterson  :  "REPRICE: 2:54 PM - Provident Funding Better"

Jerrod Nash  :  "REPRICE: 1:59 PM - PennyMac Worse"

Tom Schwab  :  "REPRICE: 1:41 PM - Franklin American Worse"

Rob Clark  :  "REPRICE: 1:39 PM - Stearns Lending Worse"

Tom Schwab  :  "REPRICE: 1:17 PM - AMC Worse"

Matthew Graham  :  "RTRS - US TREASURY - PRIMARY DEALERS TAKE $13.21 BLN OF 5-YEAR NOTES SALE, INDIRECT $18.84 BLN "

Matthew Graham  :  "RTRS- U.S. 5-YEAR NOTES BID-TO-COVER RATIO 2.46, NON-COMP BIDS $36.04 MLN "

Matthew Graham  :  "RTRS - U.S. SELLS $35 BLN 5-YEAR NOTES AT HIGH YIELD 1.410 PCT, AWARDS 48.70 PCT OF BIDS AT HIGH "

Matthew Carver  :  "REPRICE: 11:54 AM - Flagstar Worse"

Joe Daquino  :  "Market is still in a frenzy, even with rates rising. People want to own a home, because we are still in a zone where in some areas, a mortgage payment is less than or equal to what you would pay in rent."

Joe Daquino  :  "Maybe in your area Chad. Where I live, in the Temecula Valley, CA., they can't build homes fast enough. The amount of homes being constructed right now is amazing. People literally camping out to get 1st crack."

Chad Horvath  :  "The rate hike has really slowed down new construction, I work for a builder. "

Chris Kopec  :  "Agreed JR. That June number in my opinion was a "run to the door" for everyone committed to buying a new home.....sign the contract, lock the deal, and avoid further damage."

John Rodgers  :  "We'll see those numbers fall off a cliff in July"

Drexel Hill Mortgage, Inc.  :  "weren't thos JUNE sales locked most likely in may or earlier?"

MMNJ  :  "why are we getting blasted? Because I am floating stuff....very simple"

David Rudnick  :  "ouch... why we getting blasted June/May style?"

---

MBS RECAP: Coasting Out in Slightly Weaker Territory

Bond markets improved into the noon hour and began giving up ground then.  For Treasuries, that looked more like a "flattening out" process whereas the road was a bit more bumpy for MBS.  Both Fannie 3.5s and 4.0s rose in line with the broader bond market rally, but whereas Treasury momentum was more sideways in the afternoon, MBS dropped off a bit more steeply--at least at first.  The last alert notes the prospects for a "bounce" or follow through of that selling pressure at the 3pm Treasury close.  Treasuries don't actually stop trading for the day at 3pm, but it's the most prevalent time of day for dealers to mark the close of business as far as levels and positions are concerned.  As such, there can be some hustle and bustle focused on the time leading up to and immediately following 3pm and this was indeed the case today.  The selling pressure subsided, leaving a small divot in Treasury prices and a larger chunk out of MBS. 

MBS Pricing Snapshot

Pricing shown below is delayed, please note the timestamp at the bottom. Real time pricing is available via MBS Live.

Pricing as of 4:04 PM EST

Afternoon Reprice Alerts and Updates

Below is a recap of instant Reprice Alerts and updates issued via email and text alert to MBS Live subscribers this afternoon.

---

2:57PM  :  ALERT ISSUED: Negative Reprices Move From Possible to Probable

Although there's a chance that not every lender will be affected, negative reprices are now "likely" vs "possible." As indicated in the previous alert, when 10yr yields broke their supportive afternoon ceiling, MBS followed and both Fannie 3.5s and 4.0s are through to their lows of the day (-12 at 101-03 and -8 at 104-02 respectively). We could see this trend bounce or accelerate after the 3pm Treasury close, and would continue to emphasize that nothing major or epic is occurring here with respect to the big picture, despite the increased reprice risk intraday.

2:24PM  :  ALERT ISSUED: Living on The Edge (of Reprice Risk) Again

Compared to the last round of weakness in MBS, this one is a bit more disconcerting even if not "full-blown" by any means. Fannie 3.5s are back to their pre-auction lows and 4.0s are more than a tick below theirs. At this point, negative reprices are moving from "unlikely" to "possible" among a small group of lenders.

Fannie 3.5s down 9 to 101-06. Fannie 4.0s down 7 to 104-03. 10yr yields are up 2.6bps at 2.51. This is actually rather important as 10's have held this 2.51-ish ceiling since 11am, but will have to make a decision soon. Breaking higher would add another layer of risk to the reprice situation for MBS whereas firmly holding ground could temper it.

12:49PM  :  ALERT ISSUED: MBS Shed a Quick 4/32nds; Reprice Risk Probably on Hold

Just a "heads-up" alert for most lenders and possibly a reprice alert for one or two of the "early crowd" lenders. Prices of both Fannie 3.5s and 4.0s have come off a quick 4 ticks (.125). Volume and liquidity are light. There is no headlines causality and regardless of how it may look on the chart, this is NOT a directional mini-snowball. 10's are already bouncing and MBS might as well (if they can manage to scrape together a trade or quote in this environment).

Negative reprices are fairly unlikely here, but below here, things would start to get more legitimately risky. Sit tight if you can and wait for next move (if any!) after 2yr Auction.

11:08AM  :  Bond Markets at Best Levels as POMO Ends

Stocks continue sinking, even if only mildly, providing one of the few sources of inspiration for otherwise uninspired bond markets. Even then, Treasuries and MBS aren't willing to follow the same pace of change vs overnight trading levels. In other words, equities are back to yesterday's 10am levels whereas 10yr Treasuries would need to drop to 2.47 to achieve a similar feat.

If anything, Treasuries are showing their greatest resistance to the 'stock lever' here at the end of Fed's daily buying or "POMO" (Permanent Open Market Operations), and it's not uncommon to see a bit of extra weakness right around 11:02am for that reason.

Additionally, we run some risk of remaining under pressure in general ahead of the 1pm 2yr Note Auction. In terms of 10yr yields, 2.50 has blocked further progress so far and 10's are back to to 2.507. Fannie 3.5s are down 5 ticks on the day at 101-10 and Fannie 4.0s are down 3 ticks at 104-07--both near their highs of the day and both under the same implied pressure as Treasuries. Bottom line: near best levels on both accounts, but at risk of having those levels become resistance to further gains.

Live Chat Featured Comments

---

Matthew Graham  :  "Richard, I wouldn't expect the statement to give anything away with respect to September, but I don't think many people do. As such, there's no way to guess what the market impact will be. I understand the urge to try to get a leaning ahead of time, but that's a bad idea. The day could be equally influenced by "stuff" that happens well before rate sheets come out."

Chip Harris  :  "http://www.mortgagenewsdaily.com/mortgage_rates/blog/49123.aspx"

Chip Harris  :  "If you are happy with the rate, lock it in and make sure your lender has a float down in the event things change dramatically for the better."

Richard Carvajal  :  "Thank you MG. So there should be a chance to lock in the AM . If I may ask your infinite wisdom and knowledge MG, likeliness that the statement is towards beginning the end of QE? Or if anyone has an opinion, i'm all ears. "

Matthew Graham  :  "RTRS- US TREASURY - PRIMARY DEALERS TAKE $18.49 BLN OF 2-YEAR NOTES SALE, INDIRECT $10.55 BLN "

Matthew Graham  :  "RTRS- U.S. 2-YEAR NOTES BID-TO-COVER RATIO 3.08, NON-COMP BIDS $147.19 MLN "

Matthew Graham  :  "RTRS- U.S. SELLS $35 BLN 2-YEAR NOTES AT HIGH YIELD 0.336 PCT, AWARDS 42.14 PCT OF BIDS AT HIGH "

Matt Hodges  :  "great explanation, MG"

Matthew Graham  :  "specifically on the topic of 3.5 v 4.0, we were sort of on the edge of 3.5 relevance last week even though the bulk of new originations continue to be in 4.0s. Yesterday's rate sheets didn't necessarily change that, but they connoted enough activity in 3.5s that we should care. 3.5s will generally be a more volatile coupon but 4.0s would risk complacency in some situations where lenders who offer sub-4.375% rates would be at risk of repricing due to 3.5 fluctuations. Let me know if this does"

Matthew Graham  :  "If anyone needs detailed info on setting/adjusting alert preferences, this is good link: http://mbslive.mortgagenewsdaily.com/knowledgebase/articles/198110-setting-up-reprice-alerts-and-other-updates"

Matthew Graham  :  "Email alerts would be based on your preference, unless written by me."

Charles Murphy  :  "Does anyone know how MBSLive picks the coupon to highlight on the dashboard? Some days it seems to be 4's... other days, like today, it seems to be 3.5's and in their email alerts, it's 3's... just curious as to the rhyme/reason."

Bryce Schetselaar  :  "tbaldwin--Suntrust or Amnet"

tbaldwin  :  "I have been pricing jumbo 680,000. 80% R&T Refi for the past week. Getting crushed from a one cost lender - float until approved at 4.50 with >250 = flat fee of $2,500. I can't touch it through my 10 lenders - Virginia market. Anyone see this type of rate in our market?"

---

MBS RECAP: Uneventful Day Leaves MBS Slightly Higher

The "uneventful" nature of today's session looked to be in the cards as early as last week when markets failed to muster any meaningful response to Bernanke's two days of Congressional testimony. You may have noticed a distinct cynicism set in, at that point, regarding prospects for meaningful movements between now and next week's FOMC Announcement and Nonfarm Payrolls report. Days like today are the evidence. Treasuries were quiet overnight, both in terms of volume and volatility. While MBS were at least somewhat actively traded today, they were far from volatile with Fannie 3.5s (which now take over as "slightly more relevant" than Fannie 4.0s in terms of reprice risk) holding a 7/32nds range between 101-10 and 101-17. Modest gains at the open were improved upon somewhat by the close. Weaker-than-expected Existing Home Sales data was moderately helpful at 10am and some lenders repriced positively in the early afternoon. Rate sheets are back in line with July 1-2 levels.

MBS Pricing Snapshot

Pricing shown below is delayed, please note the timestamp at the bottom. Real time pricing is available via MBS Live.

Pricing as of 4:43 PM EST

Afternoon Reprice Alerts and Updates

Below is a recap of instant Reprice Alerts and updates issued via email and text alert to MBS Live subscribers this afternoon.

---

3:35PM  :  Holding Ground For Now; Reprice Risk Fades

MBS and Treasuries have both held their ground against earlier weakness. This eliminates or greatly moderates any negative reprice risk that had been developing after 2pm and sets up supportive "ledges" in MBS prices that can be watched for any resurgence of risk between now and 5pm. For Fannie 3.5s, that ledge would be at 101-11 and for Fannie 4.0s, 104-06. The analogous level in 10yr yields would be just over 2.49, but in general, the subdued nature of today's trading is its most striking feature (so we're not expecting drama). Volumes will end up being some of the lowest of the year and volatility is every bit as low as it was last week.

2:21PM  :  ALERT ISSUED: First Appearance of Negative Reprice Risk

This isn't necessarily a full-blown negative reprice alert, but reprices are technically possible with Fannie 3.5s 6 ticks off highs (101-11+ vs 101-17), even if not exceptionally likely. We'd also note Fannie 4.0s are only 2 ticks off highs at 104-08. 10yr yields gently tapped their session highs at 2.494 and are now back down to 2.488. The weakness is not event-driven, and the emphasis here is on the somnambulance of trading levels and activity rather than the observance of highly correlated market movers. Bottom line: some risk, but not too much yet. Know thy lender , and be careful where needed.

Live Chat Featured Comments

---

Mike Drews  :  "REPRICE: 1:03 PM - Chase Better"

Grant R. Menard  :  "I believe the Fed at least had to try and see if this economy had "legs"... It's like child.. you hate to see them fall down, but it's the only way to learn how to walk "

Jeff Anderson  :  "If/when the housing numbers drop again next month, I'll be curious to see what impact that has on the Fed's data dependent template."

Andy Pada  :  "i'm commenting on MG's reuters poll...the Fed's desire for transparency and their reiteration of a data dependent template seems to have fallen on the deaf ears."

Richard Carvajal  :  "How likely do you guys see the Fed coming out and saying "We will start tapering in Sept" at the FOMC meetings next week?"

Tim Y  :  "REPRICE: 12:14 PM - Franklin American Better"

Matthew Graham  :  "REUTERS POLL-54 OF 56 ECONOMISTS MADE NO CHANGE TO FORECAST FOR TIMING OF FED QE TAPERING AFTER BERNANKE TESTIMONY LAST WEEK "

Matthew Graham  :  "REUTERS POLL-38 OF 56 ECONOMISTS EXPECT U.S. FEDERAL RESERVE TO START REDUCING ITS BOND PURCHASES BY SEPTEMBER "

Justin Shead  :  "Plus I see pricing from 25 of the 50 states and we are seeing solid broad based growth in purchase money and home prices"

Justin Shead  :  "Virginia Beach is a nice cross section of the country. I agree with AD"

Adam Dahill  :  "I see a leveling off but not really a correction over here"

John Toepfer  :  "AD = i can't see any reason for a med. price increase of 33% YOY, and an average value increase of 22%. I personally wouldn't be rushing into a market like that. This time we can't blame appraisers and overinflated values. It is lack of inventory and the combined sentiment from buyers that they are missing their chance w/ low rates and limited supply. There has to be some correction."

Adam Dahill  :  "I have to disagree with the bubble talk. The last time around they were giving loans away with 100% SIVA loans. Today you need large DP and tight underwriting. Also many deals are being done with Cash. It's a different marker"

John Toepfer  :  "TR - the median home price in San Francisco is up to 1.0M; 33% from last year....can you say bubble?!!"

Bert Swyers  :  "2.46 strong like bull"

Jeff Anderson  :  "It looks pretty, but if we can't crack 2.46 I can't imagine we go too far."

Raul Lopez  :  "uptrend channel developing?"

---

Mortgage Rates Edge Higher; First Time in 6 Days

Mortgage rates rose modestly for the first time in 6 business days today.  For most lenders, the movement was far from abrupt, and although it won't affect yesterday's quoted interest rates for most borrowers, it may increase the closing costs required to obtain those rates. the closing costs on those quotes.  Conventional 30yr fixed best-execution remains at its newly acquired level of 4.5 percent.  Lenders continue to be stratified, meaning that pricing varies more than average between lenders and even in cases where two lenders may be in similar territory on one rate, the costs to move between rates can be quite different.  For instance, using a $200k loan as an example, one lender might only charge $1100 to move from 4.5% to 4.375% whereas another might be just over $1600.  

Despite the fact that today's final round of Bernanke's Congressional Testimony stood a chance to be a significant source of market movement, it was the morning's economic data that actually had the biggest effect.  While Bernanke was a 'potential' market mover it became clearer yesterday that the emphasis was on 'potential.'  This morning's MBS Commentary, offered the notion that "the Fed would be hard pressed to offer something new" and that markets may not be interested in Fed policy until at least July 31st when the next official Announcement is released.  That left today with the chance of seeing interest rates react more to scheduled economic data releases where a well-regarded Philly Fed Survey was much stronger than expected (despite "Fed" in the name, this is not Fed policy, but rather a survey conducted in the Philadelphia FEDeral Reserve district, hence the name).

There is no scheduled economic data tomorrow to cause hope or fear about a big potential market movement.  That said, the absence of important data doesn't preclude movement.  When market participation is this low, data-free Fridays are slightly more likely to be challenging for MBS, the mortgage-backed-securities that most directly influence mortgage rates.  In and of itself, it's not a marked enough trend to sway decision making, but when taken in conjunction with the fact that we just had our first day of higher rates since July 10th, it arguably makes more sense to err on the side of caution heading into the weekend, especially if you were floating a rate any time in the past two weeks and if today's rates meet your needs.

Loan Originator Perspectives

"A positive Philly Fed index number offset Bernanke's benign comments to Senate today and rates rose slightly throughout the afternoon. September tapering is no longer certain, and while that eases some immediate concerns, have to wonder if we've hit a short term floor on rates. Our floating bias of last few days is trending towards locking. Will take some disappointing data to help rate markets now that FedSpeak is done for the moment." -Ted Rood, Senior Originator, Wintrust Mortgage

"Market went backwards after several days of positive movement. Rates are going to bounce between 4.375% and 4.75% for the next several weeks. Since it is a sellers market, I am advising my customers to offer full price, get closing cost credit, and buy your way to the low end of the range. " -Chris Marconi VP Residential Lending First Midwest Bank

"Well a test of lower rates has failed. So lock what you can because holding out for lower rates is going to be a losing effort. Until sorry economic data prints, rates are not moving lower. I don't count on this happening." -Mike Owens, Partner, Horizon Financial Inc.

Today's Best-Execution Rates

• 30YR FIXED - 4.50%
• FHA/VA - 4.25%
  
• 15 YEAR FIXED -  3.625%
  
• 5 YEAR ARMS -  3.0-3.25% depending on the lender

Ongoing Lock/Float Considerations

• After rising consistently from all-time lows in September and October 2012, rates challenged the long term trend higher, but failed to sustain a breakout
• Uncertainty over the Fed's bond-buying plans is causing immense volatility in rates markets and generally leading rates quickly higher
  
• Fears about the Fed's bond-buying intentions were proven well-founded on May 22nd when rates rose to 1yr highs after the Fed indicated their intention to taper bond buying programs sooner vs later
• The June 19th FOMC Statement and Press Conference confirmed the suspicions.  Although tapering wasn't announced, the Fed made no move to counter the notion that they will decrease bond buying soon if the economic trajectory continues
• Rates Markets "broke down" following that, as traders realized just how much buy-in there was to the ongoing presence of QE.  These convulsions led to one of the fastest moves higher in the history of mortgage rates and market participants have not been eager to be the among the first explorers to head back into lower rate territory until they're sure they'll have some company.
• (As always, please keep in mind that our Best-Execution rate always pertains to a completely ideal scenario.  There are many reasons a quoted rate may differ from 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).

Mortgage Rates Almost Perfectly Flat Ahead of Bernanke

Mortgage rates held almost perfectly steady today.  Any lenders that offered noticeably different rates were generally in slightly lower territory, but this was barely enough to equate to 0.01 percent of movement on average.  Trading activity in MBS ("mortgage backed securities" that most directly influence rates) was exceptionally stable for a second day in a row.  The stability suggested that markets were moving into position yesterday and holding that ground today in anticipation of tomorrow's important Bernanke Testimony.  Conventional 30yr fixed best-execution remained between 4.5 and 4.625% percent.

Like any other big-ticket event, the next two days of Bernanke Testimony have tremendous POTENTIAL energy for rates.  They aren't guaranteed to take rates in one direction or the other, but reserve the right to do either (or both!) in a big way.  Such is the nature of highly anticipated events.  At stake is 'clarity.'  Market participants will take anything they can get at the moment, when it comes to gaining clarity on how Fed policy might unfold at the next two meetings. The first of those is at the end of this month, right before the big jobs report.  Bernanke's testimony may well set the tone, for better or worse, for the intervening 2 weeks.

Loan Originator Perspectives

"Solid day in rate markets today as MBS opened well and maintained slight gains throughout the day. Nice to see some market stability, secondary desks don't like volatility. We're hoping Chairman Bernanke doesn't implode this rally when he testifies before Congress tomorrow. Any reference to near term tapering will hurt rates, comments concerning benign inflation will help." -Ted Rood, Senior Originator, Wintrust Mortgage

"Rates could be better, but I think there is too much to consider tomorrow before a definitive path is taken. Hopefully BB won't undue the recent gains with more confusion as to when to taper or not. Locking in recent gains is a good idea in my opinion, but only for insurance." -Mike Owens, Partner, Horizon Financial Inc

"Rates have been on an upward trajectory all year despite a few short-term dips like we're having right now. The lesson: lock the dips. This dip could reverse when Fed chairman Bernanke is grilled by lawmakers on Capitol Hill tomorrow and Thursday. He'll probably signal that the pace of QE will continue unchanged for now, but whenever there's extended public Q&A, there's a chance he'll say something that will spook rate markets." -Julian Hebron, Branch Manager, RPM Mortgage

"Pretty quiet day today. MBS have rallied nicely over the last couple days, but as always lenders very slow passing along the gains. Tomorrow, Ben Bernanke, gives testimony to the Senate which has the potential to be a big market mover, especially the question and answer session after the prepared speech. I feel he will be dovish, pretty much like his last speech on Friday which helped MBS to rally. If he is, I suspect MBS will hold steady or move higher. So I favor floating overnight, but be prepared to lock early. Text of speech is out at 8:30am, the speech is at 10:00am, with Q&A to follow." -Victor Burek, Open Mortgage

"Can't be greedy here. The market has offered us an opportunity to lock in some decent rates and spreads following the historic selling in June. Today the market has consolidated, and is awaiting Ben Bernanke's comments tomorrow to determine direction. Odds are slightly in our favor, but the risks are too high. Lock em up, especially if closing within 15-20 days." -Constantine Floropoulos, Quontic Bank

Today's Best-Execution Rates

• 30YR FIXED - 4.50 - 4.625%
• FHA/VA - 4.25%
  
• 15 YEAR FIXED -  3.625 - 3.75%
  
• 5 YEAR ARMS -  3.0-3.375% depending on the lender

Ongoing Lock/Float Considerations

• After rising consistently from all-time lows in September and October 2012, rates challenged the long term trend higher, but failed to sustain a breakout
• Uncertainty over the Fed's bond-buying plans is causing immense volatility in rates markets and generally leading rates quickly higher
  
• Fears about the Fed's bond-buying intentions were proven well-founded on May 22nd when rates rose to 1yr highs after the Fed indicated their intention to taper bond buying programs sooner vs later
• The June 19th FOMC Statement and Press Conference confirmed the suspicions.  Although tapering wasn't announced, the Fed made no move to counter the notion that they will decrease bond buying soon if the economic trajectory continues
• Rates Markets "broke down" following that, as traders realized just how much buy-in there was to the ongoing presence of QE.  These convulsions led to one of the fastest moves higher in the history of mortgage rates and market participants have not been eager to be the among the first explorers to head back into lower rate territory until they're sure they'll have some company.
• (As always, please keep in mind that our Best-Execution rate always pertains to a completely ideal scenario.  There are many reasons a quoted rate may differ from 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).

MBS RECAP: Coasting Out At Highs; Nothing Happened Today

These days happen.  On June 20th, there were over 2.3 million 10yr Treasury Futures contracts traded.  The big nasty NFP sell-off day on July 5th garnered a still-massive 1.73 million and this last Wednesday we got our clue that we might be the only ones here this week when only 1.28 million contracts were traded (historically solid day, but not with Bernanke testimony and not in recent context).  Today's total is just over 600k. So again, that's 50% of the volume of Wednesday (which was sorta lower than expected anyway) and a shockingly insignificant 26% of June 20th volume.  Volume isn't everything, especially when only looking at one security, but it's enough to tell this story.  Low volume trading can go either way (just like any other trading) and at its best, it simply tries to pass quietly through to more liquid future pastures.  Today was quiet despite solid gains.  Technical levels were tested early (just before 8am actually) and got the only real nibble of the day in terms of supportive buying.  That was enough of a cue for a rally that persisted in linear fashion until the day's scheduled Fed buying in Treasuries provided the only other opportunity to any real activity.  Here again, the ball bounced in our favor and 11am levels (when buying was done) ended up being 3pm levels (when most dealers mark their books for the day...  3pm-5pm trading gets pushed to the next session).

MBS Pricing Snapshot

Pricing shown below is delayed, please note the timestamp at the bottom. Real time pricing is available via MBS Live.

Pricing as of 4:03 PM EST

Afternoon Reprice Alerts and Updates

Below is a recap of instant Reprice Alerts and updates issued via email and text alert to MBS Live subscribers this afternoon.

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11:06AM  :  POMO Stands Out Amid Low Volume Range Trade. More Gains For Now

"POMO" = Permanent Open Market Operations, whereby the Fed conducts its scheduled purchases of Treasuries on a virtually daily basis. In this sense, the Fed is like the head chef at a restaurant that will have a fish special at tonight's dinner service. Primary dealers are like fishmongers bringing their catch to market for the Fed's consideration. The Fed knows about how many fish it will need for dinner service, but will buy slightly more or less depending on the selection.

This can leave some dealers with too much or too little depending on how much and from whom the Fed decides to buy. During and immediately after the buying process (from 10:15am to 11:00am most days) supply and demand fundamentals come into play where excess demand from those left without enough inventory can push prices up (and yields down), whereas excess supply left on the shelves can cause prices to be discounted (pushing yields up).

If it was just one or two fishmongers, sorting out supply/demand micro-imbalances created by the daily POMO would be very simple and cause no volatility. But the fact that there are 21 fishmongers means there is more hustle and bustle to get inventory sorted out before things start getting stinky. In general, it's slightly more common to see yields fall into and during the POMO and rise afterward, but far from guaranteed.

However, if you see a noticeable move into stronger territory during that time, a leveling-off after 11am does become more likely. Volumes have also spiked (relative to excruciatingly low volume overall) during POMO, which is another clue that this is the event being traded. None of this is of any consequence to the bigger picture and only relayed here by way of explaining the move and suggesting it might get harder to sustain the momentum starting now.

Fannie 3.5s are up 10 at 101-06 and 4.0s are up 9 at 104-03. 10yr yields are down just under 4bps on the day at 2.495.

Live Chat Featured Comments

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Bill Laffey  :  "REPRICE: 2:45 PM - Cole Taylor Better"

Matthew Graham  :  "yep. Hard not to take it personally, but human psychology is what it is on both sides of the desk. If I thought I could get the same car for less at another dealership, it's a tough call between honor and financial sense. I don't begrudge the financial decision, but I really appreciate the honorable ones (like the few who said they could have gotten a lower rate but were sticking with me because of the time and effort I put in)."

Hugh W. Page  :  "MG, well said and believe me I use MBS Live every day as a tool to enhance credibility (thank you btw). What's tough is when you feel you have that connection, delivered professionalism throughout, provided great value by helping them structure the deal in a way they weren't thinking about or created great value for them and then they take your counsel to a competitor who did nothing but quote a better rate and fee structure (I assume)."

Matthew Graham  :  "Hugh, that whole topic quickly became part of my introductory conversation. Didn't prevent it completely, but almost. I didn't say I "expected" it, but that it would be understandable. I explained my business structure, how I got paid, how that related to rate sheets and markets, let them see a rate sheet and structure their own cost vs rate (back when you could do that), and spun the monitor with live MBS prices around saying "I watch this... Not many do. It puts me in a great position to s"

Hugh W. Page  :  "I don't care that you shop me, in fact I expect it. I guess I'm naive to think others will act do as I do and be courteous and professional about it. "

Jason York  :  "most of those deals that you lose won't come back to you simply because of embarassment, after you went on and on about how they shouldn't be surprised when things change, no one wants to admit they were wrong and they fell for it, so they just go with it"

Joe Daquino  :  "Depends on the client. Some people value service / reputation and some simply don't care. I got a lady who inquired with me almost a month ago and keeps asking me once a week for updated pricing on her scenario. I just sent her pricing, AGAIN, today and it is probably the best pricing I have seen since she inquired. Her response to my email today, "thanks for the response, I am still shopping around"."

Scott Valins  :  "for me, on deals where I'm being shopped and I can't offer the best rate it's probably less than 25% that I still will the clients biz. Maybe even lower."

Scott Valins  :  "survey: of the deals where you can't offer the best rate/pricing what percentage do you still end up closing due to service, reputation, other lender failed the client and they came back to you, etc? I ask b/c we always talk about how pricing isn't everything (I agree) but what do our stats say?"

Jason York  :  "I guess you can't fault them too much if people are willing to pay it"

Jason York  :  "wow, from the article: In an example of a loan on its website, CashCall says it could offer a borrower $2,525 to be paid back in 47 installments at an annual interest rate of 184 percent."

Mike Walker  :  "Here's an article on it http://www.businessweek.com/articles/2012-05-31/the-subprime-money-behind-a-winning-horse"

Joe Moran  :  "the guy that started cashcall is the same one that started ditech and sold it GMAC for gazillions. "

David Doerr  :  "I thought the money behind Cash Call was an old SubPrime Lender"

Victor Burek  :  "REPRICE: 1:02 PM - Plaza Better"

Nate Miller  :  "REPRICE: 12:30 PM - Caliber Funding Better"

Scott Valins  :  "REPRICE: 12:24 PM - Fifth Third Mortgage Better"

Eric Franson  :  "REPRICE: 12:23 PM - Wells Fargo Better"

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Mortgage Rates Lower After Bernanke Testimony

Mortgage rates improved moderately today, making it back to levels not seen since July 3rd.  That makes today something of a symbolic victory as July 3rd was the last trading day before rates swung roughly a third of a point higher in one fell swoop on Friday July 5th.  Conventional 30yr fixed best-execution is now down to 4.5 percent on average though several lenders are competitively priced at 4.25 - 4.375 percent.  This doesn't necessarily mean that one lender will have the same closing costs at 4.5 as another would at 4.25 (though that is roughly the range between the best and worst), simply that it may make financial sense to some borrowers to pay more closing costs in exchange for a lower rate.  

Today's movement was medium-sized in the grand scheme of things, and certainly could have been much larger in either direction given its source of inspiration.  The potentially inspiring event today was the first of two rounds of Congressional Testimony from Fed Chair Ben Bernanke.  Building a clear sense of how and when the Fed will adjust its asset purchases is the biggest consideration for interest rates right now, and Bernanke's testimony is/was the biggest piece of information on that topic this week or the next. 

Given the way the day unfolded, market participants weren't waiting for new information that would then give them the confidence to trade rates a bit lower.  Instead, they were waiting for the ABSENCE of new information that would have taken rates higher.  That confirms a certain level of fear and defensiveness assumed to be fueling recent highs.  It was impossible to measure the effect of that fear at the time, but days like today help confirm it and the fact rates didn't fall much further today, lets us know that they're operating in the vicinity of "neutral" heading into the next batch of super important events at the end of the month. 

That leaves us with roughly the same conclusion that we came to before today, which is a half point range centered on the "mid 4's."  Depending on how the next few days go, the center of that range will either end up being 4.5 or 4.625 percent, with extremes at 4.25 and 4.875 percent (for many less-than-flawless scenarios, these rates won't apply.  In that case, simply look at today's rate as the mid-point).  There's still an opportunity for tomorrow's Bernanke Testimony to have a larger-than-normal effect on markets, but this time that possibility will be confined to the question & answer period only (whereas today's movement was on the initial release of the prepared remarks).

Loan Originator Perspectives

"All eyes on Capital Hill this AM as Chairman Bernanke spoke to Congress. Gist of his message (and day's data) was MBS dovish, and this time market didn't throw a taper tantrum, instead rallying by over 1/2% before settling back some in PM trades. We'll take it for now, and hold our collective breaths until tomorrow when Senate gets their crack at him." -Ted Rood, Senior Originator, Wintrust Mortgage

"Initial reaction from Bernanke’s testimony has offered further validation that the Fed’s bond buying will continue in the short term. In addition, this also kept the window open for the asset purchase program to continue (contingent on economic data and stronger emphasis on job markets). With the Retails Sales miss on Monday, a disappointing Housing Starts/Building Permits report today, and a dash of Bernanke’s MBS friendly comments-- we have momentum building into this rally. Tomorrow we see Jobless Claims, and if the reports earlier this week give any indication that claims will increase; loan pricing will continue to improve. " -Justin Dudek, Mortgage Professional, Supreme Lending

Today's Best-Execution Rates

• 30YR FIXED - 4.50%
• FHA/VA - 4.25%
  
• 15 YEAR FIXED -  3.625%
  
• 5 YEAR ARMS -  3.0-3.25% depending on the lender

Ongoing Lock/Float Considerations

• After rising consistently from all-time lows in September and October 2012, rates challenged the long term trend higher, but failed to sustain a breakout
• Uncertainty over the Fed's bond-buying plans is causing immense volatility in rates markets and generally leading rates quickly higher
  
• Fears about the Fed's bond-buying intentions were proven well-founded on May 22nd when rates rose to 1yr highs after the Fed indicated their intention to taper bond buying programs sooner vs later
• The June 19th FOMC Statement and Press Conference confirmed the suspicions.  Although tapering wasn't announced, the Fed made no move to counter the notion that they will decrease bond buying soon if the economic trajectory continues
• Rates Markets "broke down" following that, as traders realized just how much buy-in there was to the ongoing presence of QE.  These convulsions led to one of the fastest moves higher in the history of mortgage rates and market participants have not been eager to be the among the first explorers to head back into lower rate territory until they're sure they'll have some company.
• (As always, please keep in mind that our Best-Execution rate always pertains to a completely ideal scenario.  There are many reasons a quoted rate may differ from 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).

MBS RECAP: Gains Mostly Maintained Despite Mid-Day Fade

Even though it was only by a small margin, both production MBS and Treasuries finish the day with a majority of the morning's gains intact.  This was a very well-contained movement considering that 10yr Treasuries certainly bounced hard at the important technical level of 2.46 and went on to finish the day around 2.49, never going much above 2.50.  It was made even more interesting by the fact that the entire rally maxed out within 1 hour of the initial data release at 8:30am.  The extent to which this suggests that Housing Starts was more of a factor than Bernanke is debatable.  Even without Housing Starts in the picture, the movement could have still looked front-loaded if markets were simply looking to rule out the presence of any new, dire information in the prepared text.  Whatever the case, each piece of data helped and Bernanke's Q&A did little to reverse the positivity that had already hit the wall before he even began. 

MBS Pricing Snapshot

Pricing shown below is delayed, please note the timestamp at the bottom. Real time pricing is available via MBS Live.

Pricing as of 4:04 PM EST

Afternoon Reprice Alerts and Updates

Below is a recap of instant Reprice Alerts and updates issued via email and text alert to MBS Live subscribers this afternoon.

---

2:00PM  :  ALERT ISSUED: Rerprice Risk Incrementally More Pronounced. FN 4.0s under 104-00

Headline says it all. We're still not free-falling, but we ARE still ratcheting lower--2 steps down, 1 step up, etc. Negative reprice risk is becoming slightly more likely for more than a small minority of lenders. Fannie 4.0s are still 7 ticks higher on the day, but well off their 104-07 highs, currently at 103-31. 10yr yields are up to 2.494 from 2.46 lows.

1:47PM  :  ALERT ISSUED: Negative Reprice Risk Increasing Moderately

We're by no means in the throes of a severe sell-off, but Treasury yields and MBS prices have been drifting gradually into weaker territory. Fannie 4.0s just crossed the 104-01 threshold that may be more consistent with a shift in risk. More simply put, we didn't view reprices as overly likely before, but now are entertaining the possibility that a few lenders might be entertaining the possibility. It's not a situation where a majority of lenders would get onboard with that just yet, but it is a risk.

11:00AM  :  ALERT ISSUED: VERY Important Technical Resistance in Play; Caution is warranted

(not a full-blow 'reprice alert' at the moment, but a loud heads up to stay cautious as Bernanke Q&A continues).

Regardless of how much of this morning's rally we chalk up to Housing Starts data vs Bernanke's prepared remarks, the fact remains that 10yr yields hit one of the most significant yield levels on the map at 2.46%. This is the 'brick ceiling' that yields hit after the FOMC Announcement in late June and has been a 'brick floor' ever since it was broken on June 21st. If you could only choose one important inflection point in the long, medium, and short-term, this would be it.

It doesn't look like a coincidence that the morning's rally stalled out at 2.46--CLEARLY bouncing MULTIPLE times before ebbing higher to 2.49-ish. Fannie 4.0s had been as highs as 104-07 and are now down to 104-02. The problem there is that the highs were seen just as many lenders were taking down markets for initial rate sheets.

That means that we're ALREADY teetering on the edge of negative reprice risk for the most reactive lenders. Although it's fair to hope and expect that many of them will not have left themselves open to these risks enough for 5 small ticks to matter, 5 ticks has mattered in the past. At the very least, we'd advocate caution from here. It only takes a few words from Bernanke to send this in either direction.

Live Chat Featured Comments

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Tom Schwab  :  "REPRICE: 3:04 PM - AMC Worse"

Rob Clark  :  "REPRICE: 2:21 PM - Provident Funding Worse"

Nate Miller  :  "REPRICE: 2:20 PM - Caliber Funding Worse"

Tom Schwab  :  "REPRICE: 2:19 PM - Franklin American Worse"

Tom Schwab  :  "REPRICE: 2:19 PM - Flagstar Worse"

Steve Chizmadia  :  "REPRICE: 2:09 PM - Sun West Mortgage Worse"

Justin Harward  :  "REPRICE: 2:06 PM - Great Western Bank Worse"

Justin Dudek  :  "REPRICE: 2:05 PM - Everett Financial Worse"

Thomas Nelson  :  "REPRICE: 1:56 PM - NYCB Worse"

Matt Hodges  :  "Matt - checked my last DC refi - no tax stamps, but $230 in recordation fees for the documents"

Matt Sullivan  :  " Transaction Type Select One...PurchaseRefinance Amount Enter purchase price Enter new loan amount Is the property five or more units? Less than 5 More than 5 units Transfer Tax $0.00 Recording Tax $0.00 Recording Fees $0.00 Total $0.00 really? The District of Columbia charges no transfer or recordation tax on the refinance of a property which has four or less units. If the property has five or more units, D.C. charges full recordation and transfer tax"

Jeff Statz  :  "I'd go on Stewart Title's info: The District of Columbia has both a recordation tax and a transfer tax. These two taxes are each 1.1% below $400,000 and 1.45% above $400,000 of the contract sales price. Unless otherwise negotiated the purchaser usually pays the Recordation tax of 1.1% or 1.45% and the seller usually pays the Transfer tax of 1.1% or 1.45%."

Ira Selwin  :  "Use the one in the middle"

Matt Sullivan  :  "one link says yes statz abd the other says no"

David Gaffin  :  "REPRICE: 1:45 PM - M&T Bank Worse"

Jeff Statz  :  "Matt Sullivan: http://www.ncsl.org/issues-research/budget/real-estate-transfer-taxes.aspx http://www.stewart.com/washington-dc/district-of-columbia "

Matt Sullivan  :  "anyone here know if there is a transfer tax in washington DC for a refinance?"

Matthew Graham  :  "they wouldn't adjust up unless they'd already adjusted down (by a lot). I firmly believe (and this is my opinion) that there is no chance we'll see more than $85 bln / mo, and the only reason it even came up is to soften the blow for markets that had grown overly complacent regarding the Fed's omnipresence."

Bill Laffey  :  " doesn't taper imply adjusting pace downward, whereas ben's trying to remind us they're open to adjust up or down?"

Matthew Graham  :  "make sure to separate the two in your mind if you haven't already"

Matthew Graham  :  "tightening rates is infinitely discrete vs tapering"

Caroline Roy  :  "thank you ben!! that is a nice bit of wording there. "

Ted Rood  :  "Like that one!"

Matthew Graham  :  "RTRS- BERNANKE: IF WE WERE TO TIGHTEN RATES, THE ECONOMY WOULD TANK "

Matthew Graham  :  "RTRS- BERNANKE SAYS NOT SEEING ANY PROBLEMS IN MBS MARKET "

Matthew Graham  :  "no assumptions right now LC. Still fighting the good fight. Small amount of reprice risk here, but almost imperceptible."

Andrew Horowitz  :  "depends on when they priced LC"

Louie Colatriano  :  "MG, what time do you assume lenders price for the new risk line?"

Ted Rood  :  "More importantly, is Maxine Waters done?"

Michael Gillani  :  "So is he done for today and talks again tomorrow/"

Michael Gillani  :  "I think in the current situation, they need to be concerned with interest rates only to the extent that they are a necessary means to get to their target points in price stability and employment."

Michael Gillani  :  " I agree MG but the problem is that I don't think it's possible to get to their inflation and jobs projections with rates where they are or higher is the problem."

Brent Borcherding  :  "Chicken or the egg, MG, but yes if everythign booms with rates at 10% they don't care. They also know that rates being low will help get this "recovery' of the ground, so yes they do care."

Matthew Graham  :  "they don't care where rates are if their metrics are satisfied. I promise"

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