MBS RECAP: 5/3/2011


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FNMA 3.5
95-21 : +0-10

FNMA 4.0
99-24 : +0-08

FNMA 4.5
102-31 : +0-03

FNMA 5.0
105-19 : +0-01

GNMA 3.5
97-04 : +0-16

GNMA 4.0
101-20 : +0-10

GNMA 4.5
104-23 : +0-05

GNMA 5.0
107-06 : +0-02

95-15 : +0-11

99-19 : +0-08

102-27 : +0-03

105-14 : +0-01

Pricing as of 4:01 PM EST

3:20PM  : 
Data and Fed Speakers Arrive Tomorrow
It’s not that we haven’t had any data or Fed speakers so far this week, just that the amount of those two things increases greatly tomorrow. First of all, although it’s rarely on our radar as a market mover, the 9am announcement of next week’s auction supply bears mentioning considering the speculative attention it’s garnered today. There are a few stories in the live updates cue if you missed them. Other data includes the standard issue MBA mortgage apps at 7am, ADP’s employment numbers at 815am, and ISM Non-manufacturing at 10am. The Fed-Speak schedule thickens as well. First up, Rosengren at 8am, followed by John Williams at 3pm (opened up for Duke last week), and though technically not a market consideration for tomorrow, Lockhart takes the mic at 8pm. No rest for the weary from here on out as tomorrow and Friday simply increase the activity and significance of data and speakers. For a detailed look, see the link below:

2:58PM  : 
More Info on Potential TSY Supply Changes
NEW YORK, May 3 (Reuters) – The U.S. Treasury, having made space for itself to borrow until August 2, will announce refunding terms on Wednesday that analysts say will likely be the same in size as February and November, with a risk for a smaller three-year auction.
Speculation about reduced supply gave Treasuries prices a bit of support on Tuesday after the Treasury Department on Monday trimmed its borrowing estimates for the current quarter by more than half to $142 billion, citing higher tax receipts and lower outlays.
But market analysts expect the refunding in May to total $72 billion, as it did in February.
“There has been some chatter that Treasury could reduce the size of the refunding following yesterday’s announcement that Treasury now estimates its borrowing needs for this quarter to be $142 billion, less than half its preliminary forecast,” said Nancy Vanden Houten, analyst at Stone McCarthy Research Associates in Princeton, New Jersey.
But Vanden Houten said she was not changing her estimate.
“We expect a set of refunding auctions totaling $72.0 billion consisting of $32.0 billion 3-year notes, $24.0 billion 10-year notes and $16.0 billion in 30-year bonds,” she said.
A small risk exists that the Treasury could come with a smaller refunding,” she added. If that happens, “we think a reduction in the size of the three-year note is most likely.”
Estimating auction sizes has become “pretty tough at this point,” said Thomas Simons, money market economist at Jefferies Co. “The Treasury’s Q2 financing estimates would argue for cuts, but Q3 estimates argue for increases.”
Still, Simons and other analysts think Treasury plans a $32 billion three-year note auction, a $24 billion 10-year sale, and a $16 billion 30-year auction for May 10, 11, and 12, respectively. [nLDE742019]
( By Ellen Freilich Editing by Diane Craft)

1:37PM  : 
House Panel OKs Covered Bond MBS Solution
WASHINGTON, May 3 (Reuters) – A bill to create a new market for financing mortgages that would help wean the $10.6 trillion U.S. mortgage market off government support advanced in the House of Representatives on Tuesday. The bill aims to establish a market for covered bonds, securities issued by banks and backed by pools of loans. The loans underlying covered bonds remain on the issuer’s balance sheet. That is different from the current U.S. mortgage system, where lenders sell many of the loans they make to government-sponsored Fannie Mae and Freddie Mac, which then repackage them as securities for investors. The Obama administration supports the legislation in the House Financial Services Subcommittee on Capital Markets and Government Sponsored Enterprises which is backed by voice vote legislation from Republican Representative Scott Garrett. The bill would have to be approved by the full committee, then the full House and the Senate before being sent to President Barack Obama for his signature into law. Garrett, of New Jersey, thinks a covered bond market could lessen the role of Fannie Mae and Freddie Mac. Senator Charles Schumer, a New York Democrat, said in March he was considering introducing a version of Garrett’s bill in the Senate. Representative Carolyn Maloney, a New York Democrat, backed Garrett’s bill as one way to help the U.S. mortgage market on the margins, though she cautioned that it is not a panacea. “Why not give it a chance?” Maloney said, adding that she considers covered bonds “a strong tool we could use to help … our housing market rebound.” (Reporting by Corbett B. Daly, Editing by Andrew Hay)

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