MBS RECAP: Reprices for Better Reported


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2:18PM  : 
Stocks Rally, Leading to Some Selling in TSY’s, MBS
It’s important to note that current MBS price levels do not yet justify a reprice for the worse or remove the possibility of reprices for the better. However, given the relatively high correlation between stocks and TSY‘s, a similar correlation between TSY’s and MBS, and the fact that stocks are rallying significantly, this is an early warning that the rest of day cannot safely be assumed to be in constant rally mode. On a positive note, 10yr notes are holding support still, right at 3.50, having just bounced down to 3.494. FNCL 4.5’s are much closer to their HIGHS, currently at 101-12, STILL WITHIN the “safe zone” for reprices for the better. SP’s are up to 1316+ and we doubt TSY’s would endure a run up to 1319 without breaking 3.50 support, potentially taking MBS out of positive reprice territory. Any further stock rally and bond selling from there could even introduce negative reprice risk by the end of the day.

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Article source: http://www.mortgagenewsdaily.com/mortgage_rates/blog/207205.aspx

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