MBS RECAP: 2/22/2012


We say “additional positive reprices” both in the sense that additional reprices have been reported since the last update and that there’s ongoing potential for additional positive reprices at current levels. This afternoon’s strength coincides with some favorable developments in longer term technical levels, which we discussed in the latest MBS Commentary post.

“From a technical standpoint, the past few sessions have been a fairly gloomy scene for MBS and Treasuries–our two representatives from those camps being Fannie 3.5 30yr Fixed MBS and good old 10yr Treasury Notes. The technical gloominess should be fairly evident in the upper sections of each chart below. In short, both MBS and 10’s had moved weaker beyond the limits of long-term trend channels and were at risk of breaking beyond horizontal levels as well.

For Fannie 3.5’s, the first major break of a horizontal level at 103-10 was seen Friday on an intraday basis, but prices made it back by the end of the day. Yesterday’s trading suggested the breakout more firmly as prices fell to the next major pivot around 103-00. It was (and still is) up to today’s price action to reiterate or refute that move. With the current strength, prices are now in position to close at 103-10 or higher; a potentially good technical development for MBS. ”

Read the full commentary here:

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