MBS MID-DAY: 1/30/2012


Owing mostly to overnight news concerning Greece’s rejection of an EU-appointed budget watchdog appointed to Athens as a condition of bailout money, MBS continue to nibble at breaking all time highs at 103-29. Volume and price reaction to the PCE data was moderate, but likely would have been more discernible without the Greece news in the picture.

Fannie 3.5 MBS last saw 103-29–their current level–only briefly in late September. 10yr yields are showing somewhat limited inclination to rally past 1.83 so far this morning, but on the other hand, have been consistently and slowly rallying since 3:00 AM.

There’s no other significant piece of economic data today although the Fed is set to buy in the 10yr sector later this morning. If MBS and Benchmark TSYs continue trading the tight ranges seen so far this morning, rate sheets should log another noticeable improvement from last week, although a lot of this will probably be seen in the form of middle-to-bottom of the pack lenders taking steps toward the leaders, whereas the leaders themselves have relatively little incentive to get much more aggressive from Friday’s latest offerings. Yes, they should still improve if current prices hold, but the middle-of-the-pack should improve more.

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