active: An "Inside Day" At All-Time Highs - 05/10/12 04:32 AM
This may be the last time we get to say this for a while but MBS--particularly Fannie 3.5's--just traded an "inside day," meaning today's highs were lower than yesterday's and today's lows were higher than yesterdays. Inside days aren't extremely common in the first place, but even less so when prices hit all-time highs. Yet we've seen it happen TWICE THIS WEEK. If that's not a profound commentary on MBS having run out of "room to run higher," we're not sure what is... That said, we do feel like a hypothetical post-roll (30yr Fixed Fannie/Freddie roll tomorrow afternoon) environment that draws … (0 comments)

active: Mortgage Rates Hold Steady Amid Market Volatility - 05/10/12 04:27 AM
Mortgages rates heldsteady for the most part today, despite relatively volatile movements in underlying markets. Actually, the bond markets of which mortgage rates are a part, were not nearly as volatile as stock markets, although both sides were keen to react to European headlines more so than today's anticipated event, the 10yr Treasury Auction.
The moderate amount of movement left most lenders very close to yesterday's offerings. Best-Execution for 30yr Fixed Conventional Loans remains at 3.875% with some lenders slightly increasing the borrowing costs at that right while many others had slightly decreased costs. The net effect left our computed average … (0 comments)

active: Stock-Lever-Inspired Weakness After Strong Opening Levels - 05/10/12 04:22 AM
MBS and Treasuries both opened up at strong levels, the former at all-time highs, and the latter at the lowest yields since 1/31/12. It's also worth noting that those 1/31 yields were an outlying dip, and were as low as 10yr yields have been since early October 2011. We hit 1.794 today vs 1.792 in January. Today's ebbs and flows are clearly linked to the broad notion of "risk," particularly as it relates to Europe. Case in point, when a Greek political leader from the far right was out around 10:30am New York time saying that there would not be enough … (0 comments)

active: The Day Ahead: Data Remains Light, But Auction is Worth Tuning in For - 05/10/12 04:13 AM
Tuesday wasn't a good day to be MBS, at least not compared to Treasuries. We began the session with less by way of overnight improvements, gained less into the morning rally, and gave back more into the afternoon sell-off. Short shrift all the way around... Better performances would require more liquidity in 3.0 coupons and it's hard to drum up liquidity and participation in 3.0's 2 days ahead of the roll. Heck, it's hard to drum up liquidity there, period.One thing that's not hard, apparently, is for the star of the family (10yr Treasuries) to march calmly and purposefully straight back … (0 comments)

active: MBS RECAP: Continuing To Lag Badly Behind Treasuries - 05/10/12 04:08 AM
In the intermediate term (about a month, perhaps), MBS have been utterly and completely outperformed by Treasuries. It looks like utter and complete carnage until you zoom out to a 9 month view, and even that looks like a slow stroll in the park compared to late 2008 spreads. The good news is that we're at a bit of a pivot point in terms of spreads which could help MBS link back up with Treasuries. The bad news is perhaps more important, in that a decent bout of spread-tightening at this point seems contingent on Treasury weakness. Given that 10yr yields … (0 comments)

active: Mortgage Rates Continue Grinding Into Historically Low Territory - 05/10/12 03:59 AM
Mortgages rates wereable to scrape together some minor improvements today but continue to have an exceedingly tough time keeping pace with the rest of the interest rate world. Slow-going gains aside, rates are still chipping away at some of their best levels of all-time. We're now getting into territory where only a few days in history have seen more aggressive rate sheet offerings.
The Conventional 30yr Fixed Best-Execution Rate remains unchanged unchanged at 3.875%. But we're starting to see some softening of the buydown costs to move to 3.75%, but this varies greatly from lender to lender. In other words, the … (0 comments)

active: MBS MID-DAY: Medium-Scale Snowball Rally - 05/10/12 03:52 AM
New All Time Highs For MBS!!!! Wait... It's sort of anti-climactic really. Rate sheets aren't much better than they were on Friday (in some notable cases, they're worse?!) and benchmark Treasuries continue to forge lower in yield thanks to snowball buying (short-covering in Treasuries and Stock lever). All of the above finds 10yr yields testing the 1.83% technical level. Unlike most 11am examples of "post-Fed-Twist-buying" bounces, this one isn't shooting immediately higher in yield. Maybe we're finally getting some more sincere reaction to Friday's NFP and Euro-election results as well? Volume is definitely higher today than yesterday, indicating some level of … (0 comments)

active: The Day Ahead: Superficially More Active, But Wednesday Will Be Better - 05/10/12 03:44 AM
Diligent readers of this commentary might ask themselves: "I wonder if those guys know how much FLAT, DEAD, BORING, and SIDEWAYS has been in the commentary recently." Indeed we do dear reader. Indeed we do... And so it is with more than a little bit of resignation that we regret to inform you that YET ANOTHER FLAT, DEAD, BORING, and SIDEWAYS trading session is now drifting inconsequentially further away in the rearview.Monday was one of the slowest days of the year. A slow day was not entirely unexpected, but the magnitude of the slowness was--if nothing else--a bit odd considering that … (0 comments)

 
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