MBS MID-DAY: 9/23/2011


Bond Markets are weaker this morning and with tons of volatility between MBS and Treasuries. As far as the weakness in general, equities futures were able to bounce just before breaking long term support. Everyone’s a bit jumpy when things move as much as they have over the past few days. No one wants to be on the wrong side of a trade if a big snap-back materializes.

That makes for some volatility, and indeed we’re seeing that this morning with MBS down 20 ticks and back up 8 or 9 in the space of an hour. Our new sweetheart 3.5’s are 8 ticks down on the day at 103-13, but don’t pay much attention to the levels. Things are choppy and thinly traded. There’s word that a big seller of MBS swept through the market earlier as well. Big Sellers + no volume otherwise = Big movement.

All that being said, this morning’s weakness is NOTHING. 10yr yields are up 2 bps to 1.73. Fannie 3.5’s are at 103-11 versus the previous “concrete ceiling” level of 101-25! A bit of pullback is OK, and lenders shouldn’t ding ya too hard because of it.

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