Welcome to the new normal in MBS trading. Here we are, “breaking” higher into what are technically “new all time highs” in production coupons and it couldn’t seem any less exciting. Granted, the lowest rates of all-time are exciting–dream-like even–but the precursor to dreaming is sleeping, and to that end, the underlying market movements are doing their best to put us to sleep.
Fannie 3.0’s are up 8 ticks on the day at 105-11, and have hit 105-12 a few times today–the new all time high. We also hit new all-time highs once last week and twice the week before. This pattern of acceleration past previous all-time highs isn’t unheard of in terms of daily closing levels, but the less common aspect is that of the utter calmness in intraday price levels. Indeed MBS haven’t ticked more than twice in the same direction since 10am.
Treasuries are similarly calm today with 10yr yields essentially between 1.71 and 1.72 since 10am. Volume is extremely low across the board as we’ve seen on so many data-free Monday mornings.