Bond Markets Overcome Sideways Momentum Late in The Day.


Most recent alert from MBS Live:

MBS Now Approach Highs of the Day, Reprice Risks Shift Positively 3:03PM

The 10yr note just staged a nice little rally to the mid 2.05’s for the 3pm closing marks and MBS are near their highest levels of the day, currently at 101-24. Some of the faster-acting, algorithmically-motivated lenders could even be considering a reprice for the better here, but at the very least, this alert should serve to unwind the previous risk of reprices for the worse.

It’s been a generally tough day for MBS and bond markets in general and this afternoon is really the first decent, sustained rally we’ve seen.  Even then, it looked like benchmark 10yr yields were determined to go no lower despite a bond-friendly stock-lever.  I’d even been in the process of charting out the sideways momentum in 10’s vs downward momentum in stocks when the levee finally broke.  As I type 10’s are already into the 2.04’s….  Here’s the “before and after” chart:

Whether or not this is “too little too late” for many lenders to reprice ahead of a 3-day weekend remains to be seen.  Regardless, between the roll’s affect on MBS charts and the generally sideways momentum, today just felt sort of lackluster for MBS.  At times like this, it helps to remember where we are in the grand scheme of things.  So here’s one of those Disney World “You Are Here” charts, translated for Fannie 3.5 MBS:

Reminder: bond markets are closed tomorrow in observance of Veterans Day.

Leave a Reply