As we often discuss, lenders tend to be a bit more hesitant to offer positive reprices on Friday afternoon gains, especially before 3-day weekends, especially when the gains are only 3-5 ticks. All these things and more today as Fannie 3.0s edge up 4 ticks from opening levels (9 ticks day-over-day) into the noon hour.
10yr yields are down to 1.8381, just edging below yesterday’s opening levels. Yesterday’s nasty little sell-off is effectively undone, at least for now, and it currently stands as yet another instance of bond markets following stocks during earning’s season (especially during domestic hours), but giving up less relative ground than the stock rally suggests.
Case in point, SP futures at 1468 lined up with 10yr yields at 1.842 yesterday morning, but now 10yr yields are back below 1.84 despite SPs only having fallen to 1472 from 1480 highs yesterday. Lots of numbers just now, but the point is that stocks and bonds are following each other a fair bit minute-to-minute, but day over day, bond yields have been able to move lower vs stock prices. NOTE: this could be nothing more than money simply flowing back into both sides of the market as a new year of trading picks up, but the trend is net-positive just the same.
Back to business though… Reprices… Are they Possible? In a word, yes. It’s just that they’re less likely than they otherwise would be. The longer that current levels are maintained or improved upon, the more possible they’d become, but some lenders have probably already tuned any gains out for the day. Warning bells would be set for sell-offs, but otherwise, the 3-day weekend will start early for some.