For all the sturm and drang surrounding mid-day market movements inspired by dueling ideologies between Fed speakers, MBS are inching toward the door within a few ticks of unchanged. Treasuries are just slightly weaker, but ended up holding under the 2.62 ceiling in 10yr yields easily. Volume was light (only Tuesday was lighter) as markets are predictably more interested in next week's meatier calendar with Retail Sales on Monday and Bernanke's Humphrey Hawkins testimonies later in the week. Trading is still edgy around instances of Fed-speak, but consider that the trading range this week was a mere 20bps (10yr benchmark) with FOMC Minutes and Bernanke in play as opposed to 50bps on the week of the FOMC Announcement. Slowly but surely, we MIGHT be learning how to freak out a little less while we wait for major doses of data informing QE prospects.
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
Just a heads up: the previously hopeful "Bullard bounce" didn't garner any follow-through in bond markets. 10's are back at their highs of the day and MBS are close to their lows. Negative reprice risk remains a moderate, lingering concern, but more so among those lenders who have histories of repricing late on Fridays when MBS prices might not necessarily justify it. Fannie 4.0s are down a tick at 103-07, but liquidity looks to be lightening up for the weekend. More importantly, if you were planning on locking today, positive reprices are almost certainly out of the question.
♫ I don’t want to do it all at once, but I think we should begin to taper very soon and hopefully end it by the end of this year. I’d like for us to start in September.♫
But Bullard Bit Back with this Banjo Backfire:
♫ Pulling back on accommodation as inflation is sinking is not the right combination,I’d like to see us do
more to ensure inflation doesn’t continue to slow.♫
Confused city folk stood by their cars watching the the two go at it. Bond traders hadn't but heard the first few notes of Plosser before selling into 'reprice' territory over the past hour, but are now finding Bullard's dulcet tones reason enough to start tapping their feet.
Fannie 4.0s are back in the green to the tune of 4 ticks at 103-12 and 10's are now unchanged vs 5pm levels at 2.57. Negative reprices have been trickling through until just recently, and some may be lingering, but the bounce in prices here makes them less likely from lenders who hadn't already put one out.
To be clear, there's no stampede back to the highs of the day, but neither is there a wanton sell-off into the afternoon (and hopefully we'll be able to say this in 3 hours as well)!
Unless things change course quickly, we've quickly flushed out all of the days gains. Fannie 4.0s now down to 103-07, 1 tick into negative territory. Lenders priced when we were 6-9 ticks into positive territory, so expect negative reprices if we stay here, and quicker lenders will be out with them any minute.
In progressive steps since the Fed's scheduled buying operation beginning at 10:15am, investors have started paring positions ahead of the weekend. The most recent pop was a bit more abrupt than the range-trading that preceded it. 10's are up to 2.576 and Fannie 4.0s are down to 103-09. Negative reprices are possible for most investors.
Live Chat Featured Comments
Scott Valins  : "REPRICE: 1:05 PM - Cole Taylor Worse"
Michael Tadros  : "REPRICE: 12:23 PM - Provident Funding Worse"
Matthew Graham  : "Here's what I was referencing re: 10am trend continuing. We're actually back in it now and smack dab in the middle of yesterday's range. In other words, we could have been headed into weaker territory regardless of plosser, and perhaps he just gave a push. Never know... http://screencast.com/t/nEPCIVUd0mG"
Brent Borcherding  : "REPRICE: 12:21 PM - Sierra Pacific Worse"
Bromi Krock  : "your alert is right on the money MG. sell first on any news that is taper postive."
Matt Hodges  : "Freddie mac is RP also"
Matt Hodges  : "REPRICE: 12:14 PM - BB&T Worse"
Matt Hodges  : "REPRICE: 12:14 PM - USBank Worse"
Matthew Graham  : "as the first alert noted, we'd already bottomed out heading into POMO. Not uncommon"
Matthew Graham  : "assumed to be plosser and/or exacerbated by plosser."
Matt Hodges  : "REPRICE: 12:13 PM - Wells Fargo Worse"
Justin Harward  : "What happened? Just came out of a closing to a mbs alert (thanks btw). The mobile chat only goes back a little bit. What caused the bleeding? Plosser? Or something else."
Matt Hodges  : "REPRICE: 12:13 PM - Suntrust Worse"
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