MBS REMINDER: 5/18/2011

Afternoon Market Updates

A recap of MBS Market Updates provided by MND Analysts and streamed live to the MBSonMND Dashboard.

3:59PM  :  FOMC Minutes Recap: Internal Debate Heats Up

There was a larger than expected slowdown in 1st quarter growth, but the Fed believes those effects will prove "transitory" assuming continued improvement in household balance sheets, easing credit conditions, and strengthening labor markets. The economy appears to be gaining enough traction to support a MODEST recovery, but remains highly sensitive to a number of variables including a larger-than-expected drag on household and business spending from higher energy prices, continued fiscal strains in Europe, larger-than-anticipated effects from supply disruptions in the aftermath of the disaster in Japan, continuing fiscal adjustments at all levels of government in the United States, financial disruptions that would be associated with a failure to increase the federal debt limit, and the possibility that the economic weakness in the first quarter was signaling less underlying momentum going forward. If the variables listed above do not slow the pace of economic expansion and growth resumes as anticipated in the second half of 2012, the Fed will likely be forced to begin the exit process from extremely accommodative policy. In preparation for such a scenario, the Fed economic staff gave a presentation on strategies for normalizing the stance and conduct of monetary policy over time as the economy strengthens. This does not mean the move toward such normalization would necessarily begin soon, but it does describe the steps the Fed will take toward tightening in the context of the economic outlook and the Committee's policy objectives.

3:56PM  :  Econ Data, Fed-Speak, TSY Announcement Tomorrow

As is more often the case for Thursdays than any other day of the week, tomorrow's calendar is thick with a variety of economic events. As always, you can get a detailed view of those with the link at the bottom of this update. Here's a snapshot: In terms of scheduled economic reports, Jobless Claims is the sole occupant of the 830am time slot. After that, there's a 10am triple-team with Existing Home Sales, Philly Fed Survey, and LEI. Of those, we'd tend to be most interested in Philly Fed although Tuesday's Housing Starts did illicit a bit of a market reaction, so perhaps tomorrow's Home Sales data will emulate. Whatever the case, 10am is packed. Fed speakers appear throughout the day as well with Dudley at 830am, Dudley at noon (yes, again), and Evans at 140pm. Also, though it's not nearly the same sort of market mover as a pure 10yr TSY note auction, there will be a 10yr TIPS auction tomorrow at 1pm which has a bit of market moving potential on occasion. 2 hours earlier, the next round of TSY supply is announced, though there isn't as much speculation of a reduction in offering sizes as there was 2 weeks ago.

3:30PM  :  FOMC Minutes: Depressed Demand for Housing

Here is an excerpt from the FOMC Minutes discussing the state of the U.S. housing market: "Activity in the housing market remained very weak, as the large overhang of foreclosed and distressed properties continued to restrain new construction. Starts and permits of new single-family homes inched down, on net, in February and March, and they have been essentially flat since around the middle of last year. Demand for housing also continued to be depressed. Sales of new and existing homes moved lower, on net, in February and March, while measures of home prices slid further in February. Rates on conforming fixed-rate residential mortgages rose modestly during the intermeeting period, and their spreads relative to 10-year Treasury yields narrowed slightly. Mortgage refinancing activity remained near its lowest level in more than two years. The Treasury Department's announcement in late March that it would begin selling its holdings of agency MBS at a gradual pace had little lasting effect on MBS spreads. The Federal Reserve began competitive sales of the non-agency residential MBS held by Maiden Lane II LLC; initial sales met with strong demand, but market prices of non-agency residential MBS were reportedly little changed overall. The rates of serious delinquencies for subprime and prime mortgages were nearly unchanged but remained at elevated levels. However, the rate of new delinquencies on prime mortgages declined further."

3:23PM  :  Reprice Risks Remain

Despite MBS having fallen more than enough to justify reprices for the worse, that hasn't been a widespread phenomenon as yet. That's not to say that they're not on the way, simply that lenders appear to be absorbing a higher than average amount of price losses in MBS. To quantify the weakness, FNCL 4.5's are down 8 ticks at 103-08 and 10yr note yields are up just over 6 bps on the day at 3.173.

2:48PM  :  New MBS Commentary Post

1:42PM  :  ALERT: Feedback Needed: GFE and TIL Combined by CFPB

WASHINGTON – The Consumer Financial Protection Bureau (CFPB) today announced the Know Before You Owe project, an effort to combine two federally required mortgage disclosures into a single, simpler form that makes the costs and risks of the loan clear and allows consumers to comparison shop for the best offer. Tomorrow, the CFPB will begin testing two alternate prototype forms that are designed to be given to consumers who have just applied for a mortgage loan. This testing – which will take place over the next several months and involve one-on-one interviews with consumers, lenders, and brokers. To view the combined forms and share feedback, check out this post: http://www.mortgagenewsdaily.com/05182011_gfe_til_combined.asp

1:40PM  :  Stock Lever Keeps Pressure on TSYs, MBS

With just over 40 minutes to go until the FOMC Minutes, a persistently bullish stock market is coinciding with persistent weakness for bond markets. It all speaks to the on again, off again possibility/fear that the current pace of the economic recovery is overdone. Traders may find clues that could help in deciding that in the upcoming FOMC Minutes. FNCL 4.5's are currently down 4 ticks on the day at 103-13 and 10yr notes are 4.6 bps higher in yield at 3.1599 near their weakest levels of the day. Several reprices for the worse have been reported since last update, and that risk remains for lenders who have not yet released one.

12:38PM  :  ALERT: Reprices for Worse Reported

FNCL 4.5's have hit their lows for the 4th time today, down 6 ticks at 103-10. 10yr benchmarks just broke through their supportive ceiling at their highest yields of the day moving from 3.153 to 3.156. Reprices for the worse have been seen, and any lender that hasn't put one out yet is a risk, though the earlier rate sheets more so.

12:00PM  :  Profits Taken, Bond Markets Stabilize in Weaker Zone

With the exception of 1 hour so far this morning, profit taking has been the order of the day, meaning that accounts are selling open fixed income positions, bringing prices lower and yields higher. The pace has been aggressive relative to recent instances of profit taking and without new short positions coming into the market, the selling pressure seems as if it has run its course for the morning. That leaves 10yr yields having bounced around 3.15 and stabilizing around 3.145. FNCL 4.5 MBS are down 4 ticks on the day at 101-12, the level that had previously served as 2011's bullish resistance (much like 3.14 had been in the 2011 resistance zone for 10yr notes). Best case scenario, if the rally continues, these could both turn out to look like great pivot points for the next leg lower in yield. But we wouldn't make any bets on that happening today unless the post-FOMC-Minutes trading is bond-bullish. With MBS near their lows of the day, we're still at risk of reprices for the worse, though with slightly less certainty than if we had moved straight down through the 103-12 zone.

11:22AM  :  New MBS Commentary Post

Featured Market Discussion

Matthew Graham  :  "FYI, if anyone is looking for a recap of the pertinent points from the FOMC minutes shortly following the release itself, we will normally put those right in the chat window and make them "featured comments" so that if you click to view featured comments only, they should be easy to find and see beginning just after 2pm. "

Jill Statz  :  "my rep just told me that adding or removing a borrower is now standard FNMA policy now for DURP"

Matthew Graham  :  "seems that way so far"

Gus Floropoulos  :  "glad I locked this morning"

Matthew Graham  :  "10yr notes back at high yields. MBS at lows."

Michael Tadros  :  "Jill - I believe Flagstar sent out an update a few days ago that lets you restructure the note "

Victor Burek  :  "or death"

Victor Burek  :  "i thought you could if a divorce"

Jill Statz  :  "on a DURP loan you can not remove a borrower at all can you?"

Steve Chizmadia  :  "Agreed CK, It would have been nice on the sample forms though if they used an ARM example with adjustments and caps that actually existed."

Chris Kopec  :  "I've reviewed the forms....they are fine. Best we could expect, and much better than the crap sandwich we are currently forced to provide. I assume originator compensation will continue to be offset by lender credit, but I'll wait for further direction from our Federal Overlords on that."

Steve Chizmadia  :  "I was under the impression there will be a seperate page that discloses "commission""

Caroline Roy  :  "hi all, on the new combined GFE/ TIL form it would appear that there is no place for the YSP/credit? does that mean that the last two years of complaining about it worked?"

Adam Quinones  :  "FOMC Minutes: http://federalreserve.gov/newsevents/press/monetary/20110518a.htm"

Matthew Graham  :  "* A FEW SAW RISE IN INFLATION RISKS SUGGESTING FED MIGHT NEED TO TIGHTEN SOONER THAN CURRENTLY ANTICIPATED"

Matthew Graham  :  "* A FEW FELT FED SHOULD BE READY THIS YEAR TO TAKE STEPS TOWARD TIGHTER POLICY, POSSIBLY RAISING RATES OR SELLING ASSETS"

Matthew Graham  :  "* MOST SAW RISKS TO GROWTH OUTLOOK AS BALANCED, BUT A NUMBER SAW RISKS TILTED TO DOWNSIDE DUE TO ENERGY COSTS, EUROPE STRAINS "

Matthew Graham  :  "* MANY PARTICIPANTS HAD BECOME MORE CONCERNED ABOUT UPSIDE RISKS TO THE INFLATION OUTLOOK - FED "

Matthew Graham  :  "* FED PARTICIPANTS REVISED UP INFLATION PROJECTIONS FOR 2011, BUT SAW RECENT RISE IN INFLATION AS TRANSITORY "

Matthew Graham  :  "* FED - PARTICIPANTS VIEWED WEAKNESS IN Q1 GROWTH AS LARGELY TRANSITORY, BUT EVENTUAL PICKUP IN GROWTH SEEN LIMITED"

Matthew Graham  :  "* SOME PREFERRED THAT MONETARY POLICY OPERATE THROUGH A CORRIDOR SYSTEM WITH FED FUNDS IN MIDDLE OF RANGE-FED "

Matthew Graham  :  "* MOST SAW CHANGES IN FED FUNDS RATE AS PREFERRED ACTIVE TOOL FOR TIGHTENING MONETARY POLICY WHEN APPROPRIATE-FED "

Matthew Graham  :  "* A FEW PREFERRED SALES BEFORE RAISING RATES, A FEW PREFERRED RATE HIKES, ASSET SALES AT SAME TIME-FED "

Matthew Graham  :  "* GRADUAL SALES PACE BEGUN LATER SEEN ALLOWING EARLIER RISE IN RATES FROM ZERO; ALLOWS OPTION TO CUT RATES LATER IF NEEDED "

Matthew Graham  :  "* MAJORITY PREFERRED SALES OF AGENCIES TO COME AFTER FIRST INTEREST RATE INCREASE, MANY PREFERRED GRADUAL SALES PACE-FED "

Matthew Graham  :  "* FED-MOST FELT THAT, WHEN APPROPRIATE, ASSET SALES SHOULD FOLLOW PREDETERMINED, PREANNOUNCED PATH, BUT PATH COULD BE ADJUSTED "

Matthew Graham  :  "* CHANGES IN STATEMENT LANGUAGE REGARDING FORWARD GUIDANCE WOULD NEED TO ACCOMPANY NORMALIZATION PROCESS - FED "

Matthew Graham  :  "* FED -NEARLY ALL AGREED FIRST STEP WOULD BE CEASING TO REINVEST AGENCIES, AND SIMULTANEOUSLY OR SOON THEREAFTER, TREASURIES "

Matthew Graham  :  "* SALES OF AGENCY SECURITIES WILL BE COMMUNICATED TO PUBLIC IN ADVANCE, PACE ADJUSTABLE TO CHANGES IN CONDITIONS - FED "

Matthew Graham  :  "* OVER INTERMEDIATE TERM, FED WILL SHRINK BALANCE SHEET, RETURN TO HOLDING ESSENTIALLY ONLY TREASURIES - FED "

Matthew Graham  :  "* DISCUSSION OF NORMALIZATION STEPS DID NOT MEAN MOVE TOWARD NORMALIZATION WOULD BEGIN ANY TIME SOON - FED "

Matthew Graham  :  "* FED DISCUSSED SCENARIOS FOR NORMALIZATION OF POLICY AT APRIL 26-27 MEETING- MINUTES "

Adam Quinones  :  "you know best Terry. Pls share feedback on the post itself. The CFPB will be reading it."

Terry Colabrese  :  "AQ, I just looked over the link you posted. It's a little hard to think about this from the consumer's viewpoint, but: in what ways is this change making it more simple for the borrower to comprehend this information?"

Victor Burek  :  "nexbank worse"

Matt Hodges  :  "ty mbsonmnd"

Matt Hodges  :  "locked one with WF 1 hour ago"

Matt Hodges  :  "WF rep 1:01"

Andrew Horowitz  :  "-13/32nds yield at 3.16 a bit of perspective when referring to this "massive" sell off"

Jason Zimmer  :  "i was fine with the switch from the old gfe to new because it was a new concept, but to just tweek and cause all this mess all over again is really frustrating"

Steven Bote  :  "I do see all that, VB, and I get what you all are saying. With this version, it basically makes it so that I will have to explain the difference between closing costs, and total setttlement costs. Which is by the way, what I have to do now with the current version of the GFE and TIL."

Victor Burek  :  "bote... you are looking at the same form... it says A+B+Cetc = total closing costs.,not total settlement costs"

Victor Burek  :  "how many clients will say... you are chargine me $10000 in closing costs... no mr. client..good portion of that is escrow..."

Victor Burek  :  "all those are not closing costs...insurance and escrow is not a closing cost...it is a settlement cost.... the form should be accurate"

Steven Bote  :  "It spells it out right there, A+B+C, etcetera = total settlement costs."

Steven Bote  :  "You should be able to explain that to your clients, VB."

Victor Burek  :  "i dont like line F...should say total settlement charges..not total closing costs"

Ira Selwin  :  "They are looking for feedback VB, theres a bunch of info on the site "

Victor Burek  :  "so that form is supposed to take the place of gfe and til?"

Ira Selwin  :  "Sample 2: http://www.consumerfinance.gov/wp-content/uploads/2011/05/disclosure2.pdf"

MBS REMINDER: 5/16/2011

Afternoon Market Updates

Much in the same way 10yr yields are experiencing tough resistance floors around the 3.14 level, MBS are doing battle with their own demons. But for MBS, the demons are in the ceiling, and the ceiling is around 103-12 in FNCL 4.5's. Keep in mind that these sort of technical mileposts are not hard and fast brick walls and that a certain amount of deviation from the exact levels are perfectly expected in both MBS and TSYs. Anywhere between 3.13 and 3.16 is fair game for considering resistance to remain intact. Same story with 103-12 in MBS. We saw 103-13 on Friday, but the majority of "bounces" occur slightly lower. Ultimately, what matters most any time we see prices move generally sideways like this is "what they do next and with what kind of volume." At this point in the day, volume is relatively low, and the day in general is relatively lower than Friday. The leading candidate to motivate both TSYs and MBS from their respective resistance levels is Wednesday's FOMC minutes, but we're in one of those "storing energy" episodes, so be ready for it to happen at any time this week and in a more decisive fashion than the recent range-bound trends. Still... This is the kind of range-bind we don't mind as it continues to allow for the best rates of the year. Several additional lenders have repriced as MBS continue to grind near their ceiling. More could follow before the day is out.

3:23PM  :  New Mortgage Rate Watch Post

2:27PM  :  Blackrock's Rieder: TSY Yields to Drift Higher

NEW YORK, May 16 (Reuters) - U.S. Treasury yields have likely bottomed after the recent rout in commodity markets caused a safe-haven stampede into bonds, and will inch higher, a top bond fund manager at BlackRock said on Monday. Rick Rieder, who oversees half of BlackRock's $1.15 trillion of fixed-income assets, told Reuters that he will consider buying Treasuries if 10-year yields rose to the 3.60 to 3.75 percent range, 0.40 percentage point above their current level. "Now it's hard to see tremendous upside (on yields)," Rieder told Reuters of the Treasuries market. Rieder, who is chief investment officer for fixed income, fundamental portfolios, was reluctant to add risky debt securities ahead of the Federal Reserve completing its $600 billion bond buying program, dubbed QE2. BlackRock has been paring its holdings of the so-called non-agency mortgage bonds that had been rallying for nearly two years, he said. The outlook is short-term, however, as the firm's portfolios are expecting to resume its purchases at lower prices, Rieder said. "We've upgraded in quality in portfolios, increased liquidity in the instruments we hold in some of them, as you get closer to the end of QE2 on the assumption you get more volatility," he said. Separately, it would be tough for Treasury Inflation-Protected Securities to sustain their rally this year after the commodity sell-off and a fall in inflation expectations, Martin Hegarty, who co-heads the management of Blackrock's $22 billion in global inflation-linked portfolios, told Reuters. (Reporting by Richard Leong and Al Yoon, Editing by Chizu Nomiyama)

2:13PM  :  HR 1859 Keeps Loan Limits at Current Levels

Two lawmakers have introduced bipartisan legislation that would eliminate Freddie Mac and Fannie Mae while still keeping a government presence in the housing finance marketplace. HR 1859, "The Housing Finance Reform Act of 2011", is sponsored by Congressmen Gary Peters (D-MI) and John Campbell (R-CA). Peters/Campbell have aimed this bill at overhauling the federal mortgage finance system and winding down the embattled mortgage giants, Fannie Mae and Freddie Mac, while establishing a new system of private mortgage associations - funded by private capital. Sponsor's believe the legislation will ensure liquidity in the secondary mortgage market because mortgage investments would still be backed by a government guarantee, which the plan has mandated strict standards around to safeguard taxpayers. In addition to these mandates, the legislation would extend current loan limits until Fannie and Freddie are no longer in conservatorship. FHFA has six months to provide a transition plan to wind down the GSEs and must determine within one year after five associations have been chartered whether the GSEs can be safely placed into receivership, an event that must occur no later than three years after two associations have been chartered.

1:25PM  :  New MBS Commentary Post

1:20PM  :  ALERT: Positive Reprices Possible. MBS at Highs

In a break from a recent trend of "lower highs and higher lows," MBS are a few ticks better than their previous high, currently up 3 ticks on the day at 103-11. Reprices for the better are possible at these levels, and become increasingly likely the longer they hold or the greater margin by which they are surpassed.

12:40PM  :  Rally Resisted. Bond Markets Stay in Range

In the course of the last two hours, 10yr yields improved 4 bps and FNCL 4.5's rose from 103-05 to 103-10 before running out of steam. 10's are currently at 3.1691 and 4.5's at 103-09. The joint movements are emblematic of markets that continue to bide their time, choosing to favor what has mostly been a consolidating range in the month of May. The resistance bounces for both MBS and TSYs fall in line to a series of slightly less ambitious resistance bounces. But the supportive levels have been getting higher and higher as well. This combines with the moving trend on the resistance side to suggest a consolidation centering on 3.20 in 10yr notes (roughly).

11:46AM  :  Freddie Mac Launches REO Promotion to Attract Buyers

(Freddie Mac) -HomeSteps, the real estate sales unit of Freddie Mac, is launching a nationwide sales promotion for its inventory of foreclosed homes starting today. The HomeSteps Summer Sales Promotion is offering up to 3.5 percent buyer's closing cost and a $1,200 selling agent bonus for initial offers received between May 16, 2011 - July 31, 2011 and escrows are closed on or before September 30, 2011. This offer is valid only on HomeSteps homes sold to owner-occupant buyers. A two-year Home Protect® limited home warranty that covers electrical, plumbing, air conditioning, heating and other major systems and appliances is offered on some eligible HomeSteps homes. Home Protect also provides discounts of up to 30 percent on the purchase of appliances. (Terms, conditions and limitations apply. Not all homes or borrowers will qualify. For details, see www.HomeSteps.com/smartbuy.)

11:39AM  :  Reprice Targets: Risk Skewed Negatively

Rate sheets are about unchanged vs. indications on Friday when both reprices for the better and worse were reported in the same session. At the moment, risk is skewed toward the potential for unfavorable reprices, especially with rebate mostly flat and production MBS coupon prices moving marginally lower. Our negative reprice target is 103-02 in FNCL 4.5s. This would imply benchmark 10s were testing 3.21% support. Reprices for the better are more likely to be awarded as FNCL 4.5s move into positive territory and approach the 103-12 level. We currently do not recommend floating if you need to lock within the next week to 10 days.

11:17AM  :  New MBS Commentary Post

11:07AM  :  Fixed Rate Loans Dominate Refi Transactions

(Freddie Mac) -In the first quarter of 2011, fixed-rate loans accounted for more than 95 percent of refinance loans, based on the Freddie Mac Quarterly Product Transition Report released today. Refinancing borrowers overwhelmingly chose fixed-rate loans, regardless of whether their original loan was an adjustable-rate mortgage (ARM) or a fixed-rate. An increasing share of refinancing borrowers chose to shorten their loan terms during the first quarter. Of borrowers who paid off a 30-year fixed-rate loan, 34 percent chose a 15- or 20-year loan, the highest such share since the first quarter of 2004. Eighty-four percent of borrowers who had a hybrid ARM chose to refinance into a fixed-rate product during the first quarter, continuing a pattern of the past few years of borrowers revealing a strong preference for fixed-rate over variable-pay contracts."The mortgage rate on 15-year fixed was about three-fourths percentage point below that on 30-year fixed during the first quarter. For borrowers motivated to refinance by low interest rates, they could obtain even lower rates by shortening their term. In the first quarter we saw the largest share of borrowers shortening their term while refinancing in seven years."

Featured Market Discussion

Matthew Graham  :  "S&P's heading into dangerous technical territory right now, and with only 12 official minutes left"

Matthew Graham  :  "there was talk before the last announcement that the 3yr offering size might be cut 1-3 bln, but that didn't transpire. I think it a near impossibility that any auctions would be postponed. More likely would be a VERY minor reduction in the offering size of the short end"

Chris Kopec  :  "Question: are auctions going to be postponed (i.e., 3, 5, 10 year auctions)? Or, are there other book-keeping manuevers that will clear more room for them."

Mike Drews  :  "Wells reprice"

Chris Kopec  :  "5/3 abd flagstar repriced"

Jill Statz  :  "PF another .125 for .25 better on the day"

Ira Selwin  :  "famc price change. We were owed that one"

Matthew Graham  :  ""jumping off" or "stepping off logically based on where they perceived the final destination of the bandwagon to be" "

Andrew Horowitz  :  "MG so blackrock is jumping off the bandwagon now"

Jill Statz  :  "Flagstar better"

Steve Chizmadia  :  "Mine is free standing, but there is no condo id to cross reference on VA approved condo list. I have confirmed with county they all have seperate apn's and legal descriptions, so I'm guessing VA should accept it, just wanted to confirm"

Steve Chizmadia  :  "Have any of you come across site condos on a VA loan? They are all individual units with no attached walls. I was under the impression that the HOA (there is none) and complex would not have to VA approved. Is this correct. I recently closed one on a FHA loan and wanted to know if any of you knew if VA followed the same "site condominium" guidelines"

Matt Hodges  :  "2 mos. reserves, 49.9% max dti"

Matt Hodges  :  "WF for us - we got a waiver last week"

Ken Crute  :  "what corr lenders are going to 620 on FHA?? "

Ira Selwin  :  "it's ok: These entities would not be allowed to discriminate against any originator, but the "Associations" could be formed for the general purposes of serving a particular mortgage market or category of mortgage lenders such as community banks. The legislation does allow banking organizations to acquire an interest in such categories of lenders"

Chris Kopec  :  "So instead of Fannie, we'll allow the mega-banks to be assigned even more institutional importance ...... someone tell Ozzie to stop the Crazy Train."

Chris Kopec  :  "Let;s replace Fannie - which was created in response to the last crash, and which functioned very well until it was warped beyond recognition by crony capitalism."

Andrew Horowitz  :  " An association can purchase a mortgage with an LTV higher than 80 percent if the seller retains a 10 percent stake in the loan, agrees to repurchase the mortgage on the demand of the association or private mortgage insurance is used to cover the balance of the loan above 80 percent. LOL"

Chris Kopec  :  "I have zero faith in GSE replacement."

Adam Quinones  :  "Bipartisian GSE Replacement Bill Takes Shape. Mirrors MBA Plan: http://www.mortgagenewsdaily.com/05162011_gse_reform.asp"

Jill Statz  :  "PF .125 better"

Adam Quinones  :  "not seeing much motivation in the market at the moment."

Jason York  :  "on fha, if there were lates, then it is like a foreclosure, if there were no lates, then there is no penalty, of course there are lender overlays though"

John Rodgers  :  "like a foreclosure on conv"

Steven Bote  :  "Anyone know how short sales on credit are viewed now for repeat buyers? I heard it's more or less treated just like a default with certain underwriters and so they can't qualify until four years from the deficiency?"

MBS reminder: Reprices reported

Fehler beim Deserialisieren des Textkörpers der Antwortnachricht für Vorgang "Translate". Die maximale Länge für Zeichenfolgeninhalt (8192) wurde beim Lesen von XML-Daten überschritten. Dieses Kontingent kann durch Ändern der "MaxStringContentLength"-Eigenschaft des beim Erstellen des XML-Lesers verwendeten "XmlDictionaryReaderQuotas"-Objekts erhöht werden. Zeile 1, Position 9796.
Fehler beim Deserialisieren des Textkörpers der Antwortnachricht für Vorgang "Translate". Die maximale Länge für Zeichenfolgeninhalt (8192) wurde beim Lesen von XML-Daten überschritten. Dieses Kontingent kann durch Ändern der "MaxStringContentLength"-Eigenschaft des beim Erstellen des XML-Lesers verwendeten "XmlDictionaryReaderQuotas"-Objekts erhöht werden. Zeile 1, Position 10084.

Afternoon Market Updates

A recap of MBS Market Updates provided by MND Analysts and streamed live to the MBSonMND Dashboard.

3:26PM  :  New Mortgage Rate Watch Post

3:13PM  :  ALERT: Additional Reprice Risk. MBS Hit New Lows

Moments after the 3pm official close, MBS and TSYs are well into their worst levels of the day. FNCL 4.5's are down 5 ticks on the day at 103-13 and 10yr notes are up to 3.202, a 4.5 basis point increase on the day. Lenders that haven't already repriced for the worse are now more likely to do so.

2:51PM  :  New MBS Commentary Post

1:47PM  :  ALERT: Negative Reprices Reported. Bonds at Weakest Levels

The slight bit of bearish bias in bond markets following the 3yr note auction just took another small and incremental into negative territory. The 10yr note is now just barely ABOVE 3.19 and FNCL 4.5's are at their lows of the day at 103-15. Loan pricing was mixed this AM. Some lenders owed gains from yesterday while others were flat on first release. With FNCL 4.5s -3/32 and 4.0s -6/32, reprices for the worse are possible from the lenders who withheld rebate yesterday afternoon. If your pricing was dinged this morning, you have a few more ticks to work with...if the downtrend continues you too are likely to see unfriendly recalls.

1:29PM  :  Auction Inspires Limited Directionality

Despite a reasonably normal 3yr note auction bond markets first move following the auction was to their weakest levels of the day with FNCL 4.5's falling to 103-14 and 10yr notes getting almost as high at 3.19. But both have moderated somewhat with 4.5's currently at 103-16, and 10yr notes at 3.182. It's still a moving target however, and if we had to guess, we'd say it looks a bit more bearish than bullish as far as bonds are concerned. If 10's tick further back toward 3.19, or MBS back toward 103-14, reprices for the worse would become more likely.

1:11PM  :  New MBS Commentary Post

1:04PM  :  3 Year Treasury Note Auction Results.

* U.S. SELLS $32 BLN 3-YEAR NOTES AT HIGH YIELD 1.000 PCT, AWARDS 20.92 PCT OF BIDS AT HIGH *U.S. 3-YEAR NOTES BID-TO-COVER RATIO 3.29, NON-COMP BIDS $25.87 MLN * US TREASURY - PRIMARY DEALERS TAKE $16.60 BLN OF 3-YEAR NOTES SALE, INDIRECT $10.46 BLN

12:48PM  :  Lacker: even modest recovery can be inflationary

ARLINGTON, Va., May 10 (Reuters) -- The U.S. economic recovery is humming along despite high unemployment and depressed housing activity, making it key for Federal Reserve policymakers to remain vigilant about budding hints of inflation, Richmond Fed Bank President Jeffrey Lacker said on Tuesday.
Lacker said improved household and business spending, as well as strong exports led by demand from fast-growing emerging nations, was helping to support the economic recovery.
A self-described inflation hawk who is not a voter on this year’s Federal Open Market Committee said he expects energy prices to stabilize or ease a bit, allowing overall consumer price growth to trend back toward his preferred goal of around 1.5 percent.
"We should not take that outcome for granted, however. I would be concerned if I expected substantial further price increases, but at this point, futures markets are pricing in modest declines in petroleum products," Lacker told the Northern Virginia Regional Forum.
"Having said that, our experience over much of the last decade demonstrates that a flat futures curve does not preclude further price hikes." (Reporting by Pedro Nicolaci da Costa; Editing by Neil Stempleman)

12:30PM  :  Moderate Weakness Persists Ahead of Auction

10yr notes are effectively at their highs of 3.18 with just over 30 minutes to go before the 1pm 3yr note auction. FNCL 4.5's are slightly above their lows of the day currently 1 tick down versus yesterday at 103-17. This has also proven to be their preferred pivot point of the day with more touches here than anywhere else. Risks of negative reprices for the worse are somewhat elevated since we last updated you but are most likely to change (for better or worse) after we see how accounts bid for the lowest yielding 3yr in 4 months.

11:17AM  :  New MBS Commentary Post

11:14AM  :  ALERT: First Signs of Negative Reprice Pressure

With the passing of this morning's data, we see that the week indeed looks to officially begin with the auction cycle. Volume is light and trading patterns are technical. The slightly higher yields than yesterday, consolidating around 3.17 suggest a bond market that's in the process of getting in position for today's auction. FNCL 4.5's are down a tick on the day at 103-17 and FNCL 4.0's are down 4 ticks at 100-10. The former is near previous lows while the latter is at the lowest level of the day. With 4.5's only down 3 ticks from peak to trough, it's not overly likely that we'll see reprices for the worse, but we're perhaps at the "early warning sign" stages.

Featured Market Discussion

Adam Quinones  :  "i need a shoe shine."

Mike Drews  :  "wf reprice"

Michael Tadros  :  "Sounds smarter than half the people selling the product"

John Rodgers  :  "My customers are soooo smart. After giving my client the caps on a 7 year ARM he responded with .................5% - 1st adjustment -> This is the maximum increase at year 7, which coincides with the total maximum lifetime increase over the 30 year loan period. Therefore the worst possible rate could be 9.125%
2% - subsequent adjustments -> This is the maximum increase at year 8 and after wards up to a maximum total increase of 9.125%.
5% - life cap -> Maximum cap at 9.125%.
Index – 1 yea"

Brent Borcherding  :  "Sierra Pacific worse .15"

Victor Burek  :  "5/3rd repriced for the worse"

Andy Pada  :  "Cash window at the GSEs only off by 4 or 5 bps."

Victor Burek  :  ".15 worse at flag"

Victor Burek  :  "flagstar worse"

Jill Statz  :  "PF .125 worse"

Brent Borcherding  :  "I locked 3 this morning, inside 30 days, I can renegotiate if necessary, but I believe there's greater risk of short term rise."

Shane  :  "MG & AQ - i just cancelled my subscription with one of your competitors (not sure if you would consider them a competitor or not tho)...now lets bring on 2.0!"

Adam Quinones  :  "quote " With 4.5's only down 3 ticks from peak to trough, it's not overly likely that we'll see reprices for the worse, but we're perhaps at the "early warning sign" stages.""

Matthew Graham  :  "benchmarks broke out of support, 4.5's and 4.0's hit lows of day, always going to be an "on toes" kinda time. "

Matt Hodges  :  "pricing likely occurred 3 tic higher and it looks like an ugly trend WC. If i were secondary, I'd want to get in front of it"

Adam Quinones  :  "just an early warning to be on your toes."

William Crawford  :  "We are only down 2 tics, why the negative reprice warning?"

Chip Harris  :  "The report we provided currently at this time is only designed to gather your client information and is not designed to be uploaded into the NMLS website at time. Unfortunately for now you will need to manually input the data into their site until future updates will allow for a xml upload."

Chip Harris  :  "Update on the Call Report from Calyx web support:"

Matthew Graham  :  "DEALERS SUBMITTED $25.66 BLN OF TREASURIES FOR CONSIDERATION IN FED PURCHASE -NY FED"

Matthew Graham  :  "FED BOUGHT $6.68 BILLION OF TREASURIES MATURING BETWEEN MAY 2015 AND SEPT 2016 -NY FED"

MBS REMINDER: 5/6/2011

Afternoon market updates

Recap of the MBS market updates provided by analysts and live streamed to MND dashboard MBSonMND.

3: 02 PM : ECON: trillion consumer credit Rises 6.02

* US MARCH CONSUMER CREDIT RISES to $ 6.02 TRILLION (CONSENSUS RISE $ 5.0 TRILLION) VS REVISED $ 7.55 TRILLION INCREASE EFFICIENCY in FEB * USA MARCH CREDIT INCREASES $ 1.95 TRILLION VS. $ 2.60 TRILLION DECREASE in FEB; MARCH is NOT the CREDIT is $ 4.07 TRILLION VS $ 10.15 TRILLION INCREASE in FEBRUARY

1: 41 PM : new post Watch mortgage rates

1: 30 PM : the top levels of TSYs, MBS Eclipse Thursday

Is a little surreal, but tens are 3.146 at the moment and FNCL 4.5 are up to 3 of 103 ticks-18, both better than yesterday's best characters. Already visible reprices on better, but a larger majority of lenders should get on board with the most recent movements. Despite the refusal with the Greek Minister of finance, on rumors Greek dropout of the EU, in conjunction with the inventory of a gear lever, technicals and fundamental concerns about the pace of recovery are fueling bond-bullishness/stock weakness.

12: 40 PM : timeline of Greek speculation EU output

* RTRS-11: 54-the GREEK GOVERNMENT HAS RAISED the POSSIBILITY of LEAVING the EURO AREA and re-establishing ITS OWN CURRENCY-GERMANY, SPIEGEL ONLINE * RTRS-11: 55-SPIEGEL ONLINE SAYS FIN MIN FROM the EURO area and the EUROPEAN UNION COMMISSION HOLDING a CRISIS meeting in LUXEMBOURG on Friday EVENING * RTRS-11: 56-SPIEGEL ONLINE SAYS MEETING AGENDA INCLUDES the POSSIBLE DISLOCATION DEBT RESTRUCTURING for GREECE * RTRS-11: 57-SPIEGEL ONLINE SAYS GERMANY is FIRMLY AGAINST GREECE for ANY DISCUSSION to LEAVE EUROZONE * RTRS-12: 09-GERMANY GOVT SOURCE SAYS THERE are NO PLANS for GREECE to LEAVE EUROZONE * RTRS-12: 38-the SOURCE of the EURO AREA: SOME MINISTERS are meeting in LUXEMBOURG to REVIEW ISSUES INCLUDING PORTUGAL, GRECJADZIEDZICZENIA THE ECB BUT NOTHING MORE

12: 28 PM : alert: Reprices to any better!

Speculation that Greece is considering leaving the EU and re-establishing its own currency is cited as a potential cause of the latest mini-sell-off in stocks and a rally in TSYs. The said rally leaves 10-yr notes on 3 182, best levels from the focal points of the Reitox network. But the better story is in the MBS where FNCL 4.5 only selected to the Cape, 1 scale up on the 103-15, at reprices on better possibility.

11: 17 AM : Stocks back off the highs, Pressuring TSYs

S & P's shot to 1352.49 at the open and after dipping to 1346.75 now are back to 1352.05. Leverage stocks is relatively connected slightly pushed TSYs although they fight back. We see the biggest difference in correlation between markets now as dozens of combat, you can return to 3.20. Still a clear winner in this fight, but at least it seems that the MBS marching beat of their own drummer FNCL 4.5 remain content to consolidate the advantages and disadvantages in the direction of the price of 103-11-103-12. Now they're 3 tags on the 103-12.

11: 17 AM : new post comment MBS

Functional market discussions

Matt hodges : "GMAC improvement 1: 37"

Matt hodges : "WF improvement 1: 28"

Mike Drews : "Add GMAC to that list"

J. Holliday : ", chase, citi and Wells all repriced"

Jill statz : "FAMC better"

Matthew Graham : "I'd say that 10 simply returned right to the lower trendline from the recent channel trends. Fairly bullish result given jobs data. "

Matthew Graham : "volume is quite a lot of it had to vote on the day though."

Matthew Graham : "S & p broke advantages"

MBS REMINDER: 5/4/2011

Translate Request has too much data
Parameter name: request
Translate Request has too much data
Parameter name: request

Afternoon Market Updates

A recap of MBS Market Updates provided by MND Analysts and streamed live to the MBSonMND Dashboard.

2:47PM  :  U.S. eyes auction changes if debt limit not raised

(Reuters) - The U.S. Treasury will sell $72 billion in debt next week, it said on Wednesday, but warned it would have to delay or reduce future offerings if Congress does not raise the nation's borrowing limit before August.

Next week's sale of bonds and notes, which was unchanged from prior plans, will bring the United States to the edge of its legal borrowing limit of $14.294 trillion, which it said would be reached on May 16.

The Treasury is so close to the ceiling already that it will start to employ a series of emergency measures on Friday to allow the government to meet its obligations, such as Social Security and debt interest payments.

It plans further actions on May 16 to free up more borrowing authority. The measures will give Congress until around August 2 to reach a deal to raise the limit.

"That is the date that we estimate we will run out of ability to meet our obligations," said Mary Miller, Treasury assistant secretary for financial markets. (By David Lawder and Rachelle Younglai). *see link for additional content:

2:40PM  :  Stock Bounce Continues, TSYs at Supportive Levels

Just an extension of the themes introduced in the last live update. Stocks, with an hour and a half left to go, look more and more certain to confirm a bounce of 1342 in the S&P. That bounce pulled TSY yields higher initially, but they hadn't yet broken a trendline that was passing through the lower 3.23 range (this had been the lower line in a trend channel containing all 10yr yield movements since 4/18, broken this morning and now tested from the other side, aka "pivot"). The trading that has transpired since then is going a long way to recognize BOTH the stock bounce AND the bond resistance. 10yr yields have knocked their heads against 3.23 on several noticeable occasions so far and could go as high as 3.236 without really breaking the line. Even then, that would need to happen with the sort of volume we're not too likely to get before the 3pm TSY market close. We'll keep an eye on volume and movement to see if something interesting does happen, and if so, will update you. Otherwise, today's first round obviously goes to bonds, and the 2nd round remains a draw until further notice. Implications for MBS? Nil... We had mentioned that the support would need to fail in 10's before MBS would take much notice. Indeed, trading has been slow and exceedingly uneventful for MBS as FNCL 4.5's cling closely to 103-02. Several lenders have repriced for the better and that remains a possibility at these levels.

2:01PM  :  New Mortgage Rate Watch Post

1:46PM  :  Stocks Muster Bounce Attempt. Bond Rally Pauses

We've established tons of connectivity in the stock lever... Connectivity between TSYs and MBS is another degree removed from that, so current movements in stocks have less of an effect on MBS than TSYs. That said, it has been enough of an effect to put the brakes on today's bond rally for the past hour or so. S&P's bounced on an important pivot point with strong past bounces on 2/18 and 4/27 (first as resistance, then support). As stocks made that supportive bounce today and headed higher, 10yr yields followed (low 3.21's to nearly 3.23). TSYs have technical considerations of their own however with a well traveled resistance line that has been trending lower since high volume marks on 4/18. There have been numerous "touches" but no clear breakouts until today. This gives TSYs a pivot point of their own, in the form of this downwardly sloped diagonal line that had, until today, been resistance. It serves as a great line in the sand as to when MBS might be forced to stand up and take notice of shifts in underlying benchmarks. Through the rest of the day, that line passes through an area in the low to mid 3.23's. If 10yr yields are able to bounce there (supportive, pivot bounce right? because it "used to be a floor for yields" and now we're hoping it acts as a "ceiling," hence: pivot). We'd watch that level as a reasonably likely line in the sand and let you know if we bounce or break with enough volume for it to matter. Reprices for the better have been seen but are slightly less likely now with benchmarks selling and MBS off their highs.

12:56PM  :  Buy the Rumor, Sell the News? Forced Buying Aids Rally

Today's interest rate rally has been fueled by bearish traders who are covering their short positions as benchmarks rally through technical resistance levels. We describe this behavior as "forced buying". It's an early indication of snowballing in a friendly manner . Although this position squaring is encouraging it must be intensified by real money investors (as opposed to fast$) who need to move their funds "down in coupon". It must also be backed by a worsening outlook on economic fundamentals. We'll have the opportunity to see just how receptive the bond market is to a sustained shift "down in coupon" when the Employment Situation Report is released on Friday. If the market is resistant to confirming the recent rates rally, we could be witnessing a big ole "buy the rumor, sell the news" rally right now. From that perspective, until a breakout is confirmed we will remain defensive of gains. READ MORE: http://www.mortgagenewsdaily.com/mortgage_rates/blog/210063.aspx

11:24AM  :  MBS and TSYs Holding Gains. Reprices Possible

Loan pricing is coming out 3.8 bps better on average. If your initial rate sheet came out at 9:45am or before, reprices for the better remain possible as MBS are holding their gains, currently up 3 ticks on the day at 103-02. This is the first time FNCL 4.5's have traded in the 103's this year. Despite that, benchmarks are severely outpacing MBS into this rally. 10yr notes are 11 ticks better on the day, dropping the yield to 3.2104 at the moment, thus far, confirming a breakout of the recent trend channel. The stock lever is very well connected at the moment, so look for further stock losses to support these recently heady levels in Treasuries, and conversely, a big recovery in stocks to give them pause.

11:21AM  :  New MBS Commentary Post

Featured Market Discussion

Matthew Graham  :  "10yr yields are just creeping into striking distance of the pivot line with naught but 19 minutes until 3pm marks"

Matthew Graham  :  "market has been very interesting and trading has been very pertinent to the topics laid out in part 1"

Matthew Graham  :  "most recent Live Update is effectively a "part 2" to the 1:46pm update."

Matthew Graham  :  "stocks rising reasonably quickly (3 pts from lows in S&P) and 10yr yields following in low-ish volume."

Scott Valins  :  "5/3rd reprice"

Matthew Graham  :  "and pre-NFP "lead offs" suggest to me either a tentative post-data rally if markets get what they're trying to account for or a vicious snap back if they don't."

Matthew Graham  :  "super mega ridiculously connected stock lever suggests to me broad-based sentiment trading, NFP "lead-offs," etc..."

Matthew Graham  :  "next major pivot at 1338, marking the line between "continued existence" and "end of the world" for equities"

Adam Quinones  :  "short covering has aided the rally today...this is a sign of snowball buying. If NFP is better than expected...we might be witnessing a "buy the rumor, sell the news" type event."

Brett Boyke  :  "Chase RP"

Brett Boyke  :  "Wells RP+"

Matthew Graham  :  "cheap buydowns in between those two, but is there not enough in it for brokers to be able to offer 4.25?"

Matthew Graham  :  "how likely is everyone to put out an FHA GFE at 4.25 today as opposed to 4.75?"

Matthew Graham  :  "here's a good snippet from the post for anyone who hasn't read it yet: "Right now we find ourselves at the aggressive side of the 2011 range, at the base of a steep a ledge.... teetering on a potential shift lower in production MBS coupons. One that would allow originators to hedge thier pipelines with 4.0 coupons and break the loan pricing barrier at 4.875%."The benchmark 10yr note is testing the yield lows of the year which were hit in the aftermath of the Japanese earthquake induced flight"

Andrew Russell  :  "AQ, great post, looks like 3 time is a charm, right?"

Patrick O'Keefe  :  "JR - no kidding; i'm getting smoked by brokers right now; just yesterday got competitor quote of 4.625% no points waive escrow"

John Rodgers  :  "I'm seeing a big lag in corr pricing compared to broker meaning broker pricing (conv) really good right now. Could be an indication of low volumes."

Andrew Horowitz  :  "This comment was not included in live update from Fed President Rosengren but think it is relevant none the less "Until we make more progress on both elements of the Federal Reserve's mandate-employment and inflation- the current, accommodative stance of monetary policy is appropriate""

MBS reminder: in the vicinity of the 2011 price advantages

Translate Request has too much data
Parameter name: request
Translate Request has too much data
Parameter name: request

Afternoon Market Updates

A recap of MBS Market Updates provided by MND Analysts and streamed live to the MBSonMND Dashboard.

4:01PM  :  Next Week: Less Data Overall, but NFP on Friday

If it seems that we've been alternating busy and slow weeks recently, we have. In general, the "on weeks" for Treasury Auctions have also coincided with comparatively heavy amounts of economic data. Next week follows the same rules with one noticeable exception: Friday's Employment Situation Report. Monday leads off with ISM Manufacturing and Construction Spending. Tuesday is perhaps the lightest day of the week with only Factory Orders on tap. Wednesday and Thursday pick up the pace a bit with ADP Employment, ISM Non Manufacturing, Jobless Claims, Productivity/Costs, and several Fed speakers including Bernanke on Thursday morning. Friday's only report will be the biggie, Employment Situation at 830am. We may well be waiting until then for guidance firm enough to coax bonds out of what's expected to be a range trade.

3:15PM  :  ML 11-18: Elimination of Origination Fee Cap on 203(k) Program

This letter amends guidance provided in Mortgagee Letter (ML) 2009-53. The guidance in ML 2009-53 removed the
one percent origination fee cap for standard FHA insurance programs, except for the 203(k) Rehabilitation Mortgage Insurance and Home Equity Conversion Mortgage programs. This new ML removes the one percent origination fee cap from the 203(k) Rehabilitation Mortgage Insurance Program, and clarifies that the supplemental origination fee permitted under this program is not affected.
Effective Date: April 26, 2011 for all case number regardless of when they were assigned...http://www.hud.gov/offices/adm/hudclips/letters/mortgagee/files/11-18ml.pdf

2:55PM  :  TSYs Test Best Levels in Low Volume

The overall caveat to the day is the low volume. It's quite low... About half that of yesterday. With that in mind, we're forced to sort of "brush off" a recent dip below 3.29 in 10yr notes. It looks "cool," yes... As long as you don't read anything into it making any profound statement about the strength of the bond market or the impending movement in the week to come. FNCL 4.5's didn't quite make it to their best levels of the day, but at 102-28 are 3 ticks up on the day, close to their 102-29+ high. Reprices for the better wouldn't be the craziest thing we've seen this week, but not likely enough to make an "alert" out of it.

2:04PM  :  New Mortgage Rate Watch Post

1:45PM  :  Stocks Soar. MBS Stay Strong

Stocks are the real performers of the day with very little change to positive momentum today. The S&P is making another multi-year high and is currently at 1364.17. While MBS and TSYs are also in the green, they're not quite as well off as stocks. FNCL 4.5's are up 2 ticks on the day at 102-27 and 10yr notes are almost 1 basis point lower, currently at 3.3029. There's really no more significance in today's market movements as the volume largely came and went with yesterday's and Wednesday's events. Only thing to do is turn on cruise control into the close and watch for potential reprices. We're not incredibly likely to see any at these levels.

1:40PM  :  Failed-Trade Charge for Mortgage Bonds Proposed

(Bloomberg) -- Dealers and investors in agency debt and government-backed mortgage bonds should face penalties for failing to complete trades at agreed times, according to an industry group that guides market rules. The Treasury Market Practices Group, which the Federal Reserve Bank of New York helped form in 2007 to offer advice on debt markets, is seeking comments on the proposals, which would follow the introduction of a similar practice for U.S. government bonds that the organization helped create in 2009. Uncompleted trades in agency mortgage securities remain elevated after rising to a record of almost $2.4 trillion during a week in November, according to Fed data. “We strongly believe that, like the fails charge recommended by the TMPG in the Treasury market, these recommendations will lead to more robust markets for agency debt and agency MBS and will serve to broadly reduce the risks associated with high levels of fails,” Tom Wipf, the group’s chairman, said in an e-mailed statement. The central bank’s decision to hold benchmark interest rates at record lows has encouraged failures by reducing the cost of uncompleted trades, while its purchase of $1.25 trillion of mortgage bonds through March 2010 has made it more difficult to find bonds to settle contracts in a timely manner. http://www.businessweek.com/news/2011-04-29/failed-trade-charge-for-mortgage-bonds-proposed-pimco-balks.html

12:49PM  :  Bernanke: Economy Needs More Time to Heal

WASHINGTON, April 29 (Reuters) - The U.S. economy is not fully recovered from its deep recession with housing still weighing on growth, Federal Reserve Chairman Ben Bernanke said on Friday in a speech on the importance of community development. "Our economy is far from where we would like it to be," he said in remarks prepared for delivery to a conference. The Fed earlier this week said it will see its $600 billion bond buying program, launched in November to spur a sluggish recovery, through to its planned conclusion at the end of June. The world's largest economy grew at a sluggish 1.8 percent annualized rate in the first three months of the year, but unemployment is still at a lofty 8.8 percent. The depressed housing market is holding back the economic recovery, Bernanke said. Home foreclosure rates remain high and many families find themselves owing more for their homes than the homes are worth. "Obviously, the problems in the labor market and the housing market are not unrelated," he said. (Reporting by Mark Felsenthal; Editing by Andrea Ricci)

11:46AM  :  ALERT: Reprice Outlook: For Better or Worse

C30 loan pricing improved by 16.8bps on average among the five major lenders today. The largest rebate gains are seen in note rates at and below 4.75%. With these improvements it's likely we'll be hearing more reports of attractive 4.75% quotes being offered. The buydown cost is still uber-expensive (95.1bps on average) but the note rate now carries enough rebate to offer it under lender paid commission models, even if the deal is slightly skinny in the banker/retail world. In regard to the reprice outlook, with loan pricing +16.8bps on the day and "rate sheet influential" MBS prices +5/32, gains are already baked in. We'd expect to see lenders reprice for the worse if the FNCL 4.5 hits 102-20. We'd expect reprices for the better if FNCL 4.5s break into the 103 handle. We'd target a sustained move up to 103-02.

11:23AM  :  Domestic Banks Prefer MBS Over TSYs

Who has been buying securities backed by mortgages? Over the three week period ending on April 13, domestic bank holdings of agency MBS have increased by $26 billion (from $1,093bn to $1,119bn). This sharp rise occurred after bank holdings of agency MBS remained nearly flat for about 3-4 months. In addition, a major portion of the recent spike in bank holdings of agency MBS can be attributed to the purchases of large banks instead of small banks (large bank holdings are up $21.5bn over the three week period ending on 4/13). This is unlike with the prior 3-4 months when agency MBS holdings of small banks continued to increase while those of large banks remained flat or even declined. It is also apparent that domestic banks that were aggressively growing their Treasury holdings (and agency debt) in 2009 and 1H'10 are now preferring agency MBS over Treasuries.

11:16AM  :  New MBS Commentary Post

11:02AM  :  MBS Reach Highs of the Day

FNCL 4.5's are up 4 ticks on the day now at 102-29. If the day ended right now, that would be the highest closing level of 2011 by 1 tick. 10yr notes are doing fairly well also, down 3/4ths of a bp now at 3.305. The current zone for TSY yields is a highly traveled technical level, but volumes are a bit low today. If volume picked up on a move into the high 3.2's, that would be about the only reason to get excited about current gains, otherwise it's just part of the bigger-picture range trade ahead of next week's NFP and June's termination of QE2. Potential reprices for the better aren't yet very likely. If current trends continue though, it's not out of the question.

Featured Market Discussion

Aaron Buyside Meyer  :  "During the weekend of June 18, 2011, Fannie Mae plans to implement changes to Desktop Underwriter® (DU®) for government loans, which will support a number of FHA Mortgagee Letters and a VA Circular. FHA and VA calculation, eligibility, and message changes will also be included with this release. Note that the Release Notes also incorporate information from a recent HUD announcement."

Matthew Graham  :  "with 27 economists polled so far"

Matthew Graham  :  "325k high"

Matthew Graham  :  "118k low"

Matthew Graham  :  "reuters at +190"

Matthew Graham  :  "things are gonna worsen in the first few days of next week. or at least that's how you almost have to plan it... lock up short termers, cross fingers for NFP"

Matthew Graham  :  "3.29"

Victor Burek  :  "whats the lowest the 10yr been today?"

Matthew Graham  :  "about half yesterday's volume"

Matthew Graham  :  "2nd slowest day of the month"

Ira Selwin  :  "Nice timing on the reprice outlook. FAMC reprice"

Adam Quinones  :  "i think they offer more yield than TSYs but still have government guarantee. The never ending "chase for yield" aka seeking alpha"

David Zilkha  :  "Adam, relating to that post, do you think the banks are buying them partly to bring down rates to keep the Refi bus going?"

As you can see in the chart below...FNCL 4.5 prices are near their highest levels of the year......

MBS REMINDER: 4/26/2011

Translate Request has too much data
Parameter name: request
Translate Request has too much data
Parameter name: request

Afternoon Market Updates

A recap of MBS Market Updates provided by MND Analysts and streamed live to the MBSonMND Dashboard.

3:58PM  :  Affordable Rental Housing Scarce in U.S., Study Finds

(Washington Post) - The share of renters who spend more than half their income on housing is at its highest level in half a century and it’s no longer just low-income tenants who are feeling the pain, according to a Harvard University study scheduled for release Tuesday. About 26 percent of renters — or 10.1 million people — spent more than half their pre-tax household income on rent and utilities in 2009. That’s because incomes slipped dramatically from their peak at the start of the decade even as rents kept rising. The study offers the latest in a series of grim statistics about the scarcity of rental housing, especially for the working poor. The supply has not kept up with demand in part because of a shortage of apartments, a key source of new rentals. Developers cut back on such projects when the economy deteriorated in 2009, which drove down vacancies and boosted rents. Analysts say they expect rents to keep climbing as developers try to ramp up new projects and catch up with demand. In many areas, the demand is driven by families who lost their homes to foreclosure during the housing bust and ended up searching for rentals. Meanwhile, as the job market recovers, more newly employed young adults appear to be seeking their own apartments instead of living with their parents, putting even more upward pressure on rental rates, according to one of the study’s researchers. Ideally, renters should not spend more than 30 percent of their income on housing, the study said MND wrote a story on this topic last January. READ MORE: http://www.mortgagenewsdaily.com/channels/voiceofhousing/129657.aspx

3:44PM  :  Stocks Stagnate and Bond Market Improves

Earlier we noted: "If benchmark TSYs get no lower than the 3.31's today, and no higher than 3.34 support, it's likely that MBS will keep this 102-12 to 102-16 range. " Interestingly enough, it was only moments after 10yr notes ticked down to 3.309 that FNCL 4.5's broke higher, hitting 102-17. Due to MBS making the expected move in relation to benchmark guidance givers, there's really not much of an implication here other than the fact that TSYs are rallying on massive short-covering/forced buying, and MBS are lagging. Reprices for the better continue to be a possibility, especially among lenders who have not yet released any. However, we're running into the last vestiges of MBS prices that can coincide with 4.875% Best-Ex rates and thus the production MBS community should prove to be increasingly hesitant to play ball with trading activities that put prices high enough motivate a shift in production to the 4.0 coupon. It's not that this CAN'T happen, it's just that IF IT DOES, sustaining the move will be an ongoing process requiring lots of confirmation.

3:32PM  :  HUD Awards $23 Million to HIV Housing Programs

(HUD) - Today, the U.S. Department of Housing and Urban Development announced that more than a thousand extremely low-income persons living with HIV/AIDS will continue to receive permanent housing as a result of $23 million in grants. During each of the next three years, this HUD funding will help provide permanent supportive housing for 1,015 households so they can manage their illnesses while receiving critically needed support services.

The funding announced today is offered through HUD’s Housing Opportunities for Persons with AIDS Program (HOPWA) and will renew HUD’s support of 22 local programs in 18 states (see attached chart and individual project descriptions below).

“These grants are a vital source of support to the local programs that are on the ground working to keep families healthy,” said HUD Secretary Shaun Donovan. “Knowing that you have a place to call home can make all the difference to the well-being of families living with HIV/AIDS, many of whom have been on the brink of homelessness.”

2:29PM  :  4.5 Coupon MBS See Resistance at 102-16

Although prices of FNCL 4.5's got as high as the 102-20's during the flight-to-safety rally surrounding the crisis in Japan, the most frequently recurring technical level was 102-16. The rally, at that time, ultimately consolidated its trading pattern around 102-14. This might not be that different from what we're about to see this afternoon as the 102-16 level has already provided several noticeable bounces. On the lower side, 102-12 has been supportive today. If benchmark TSYs get no lower than the 3.31's today, and no higher than 3.34 support, it's likely that MBS will keep this 102-12 to 102-16 range. 10yr notes are currently at 3.324, nearly 4 bps lower on the day. Reprices for the better have been reported, but not with unanimity yet. That should come with additional time spent at or near these levels, and the chances would decrease if prices dip below 101-12, or look like they're headed that way.

1:29PM  :  ALERT: Reprices For The Better as MBS hit New Highs

FNCL 4.5's are rallying into new highs, currently up 7 ticks on the day at 102-16. These are also the highest prices since 3/17, and factoring out the Japan-related FTS, the best levels since mid-January. 10yr yields have also fallen to their lowest levels of the day at 3.32. Current price levels suggest reprices for the better. Only exception would be a rapid retracement back below previous highs around 102-14.

1:02PM  :  DATA FLASH: 2yr Treasury Note Auction Results

* U.S. SELLS $35 BLN 2-YEAR NOTES AT HIGH YIELD 0.673 PCT, AWARDS 79.79 PCT OF BIDS AT HIGH * U.S. 2-YEAR NOTES BID-TO-COVER RATIO 3.06, NON-COMP BIDS $310.70 MLN * US TREASURY - PRIMARY DEALERS TAKE $16.92 BLN OF 2-YEAR NOTES SALE, INDIRECT $13.13 BLN

11:20AM  :  New MBS Commentary Post

Featured Market Discussion

Adam Quinones  :  "quick off topic...World Record Chili-Pepper: http://www.reuters.com/article/2011/04/25/us-australia-chili-idUSTRE73O0I120110425"

Brett Boyke  :  "WF RP"

Matthew Graham  :  "shorts getting beat up solidly today"

Adam Quinones  :  "anyone remember us saying the pre-FOMC "position squaring" parade would be friendly for rates bc of lack of liquidity. Well youre seeing that play out today...short covering led this rates rally. http://www.mortgagenewsdaily.com/mortgage_rates/blog/208264.aspx"

Matthew Graham  :  "thus on this flatter day, a 29 tick gain puts it roughly in line with the yield change across the curve?"

Matthew Graham  :  "and it take more change in price to affect yields of the higher coupon %?"

Matthew Graham  :  "because it's the most sensitive?"

Andrew Horowitz  :  "Hey MG or AQ any reason why the 30 years has been having such large mid day pricing swings"

Adam Quinones  :  "just finished recap of Case-Shiller. This data gives me a headache but I tried to simplify using charts: http://www.mortgagenewsdaily.com/04262011_case_shiller.asp"

Matthew Graham  :  "sure! 4.0 coupons DO, in fact, exist. It's just that the clear, but implicit message sent by rate sheets is to fund loans that end up in a 4.5 coupon"

Chris Kopec  :  "On the borrower paid side, I'm seeing 4.375%."

Matthew Graham  :  "I think the afterparty is more hotly anticipated"

Rob Clark  :  "So the auction will be after the announcement. That will be interesting"

Oliver S. Orlicki  :  "FAMC reprice"

Matthew Graham  :  "4.625 would have to go into 4.0 Coupon and who wants that?!?! "

Matthew Graham  :  "yeah --- all the eggs in one basket in terms of coupon concentration"

Scott Valins  :  "the gap between 4.625 and 4.75 on FHA 30 is approaching 200bps - never seen this before"

Matthew Graham  :  "yeah, gotta give it a few minutes to make sure it has some staying power"

Mike Drews  :  "I haven't seen many reprices yet"

Michael Tadros  :  "InterBank better at 1:16"

Victor Burek  :  "any reprices yet?"

Matthew Graham  :  "would a bounce at 3.31 be meaningful? no... So in a sense, would that be "expected?" I guess you could look at it that way"

Matthew Graham  :  "i "identify" what I think would be meaningful"

Adam Quinones  :  "Shorts getting squeezed out in 10s. CC MBS not keeping up....."

Matthew Graham  :  "ESPECIALLY on a 2yr auction a day before FOMC"

Matthew Graham  :  "wouldn't expect a groundbreaking BTC at these yields. 3x overall sponsorship is not "C+" material in this case, and market movements since the auction would seem to support that"

Matthew Graham  :  "not much to say about this one... bad BTC, good vs WI, indirect sponsorship redeems it above a C+ "

Matthew Graham  :  "a bit higher than expected indirects"

Adam Quinones  :  " WASHINGTON, April 15 (Reuters) - President Barack Obama said there are no quick fixes to bring down rising gasoline prices and urged caution about being too quick to tap U.S. emergency oil reserves amid uncertainty in the Middle East. "There aren't going to be a lot of great short-term solutions to this problem," Obama said in an ABC interview aired on Friday."

Matthew Graham  :  "right on the screws"

Adam Quinones  :  "OBAMA - SUSTAINED HIGH OIL AND GASOLINE PRICES COULD SLOW U.S. ECONOMY GROWTH AT TIME WHEN IT NEEDS TO BE ACCELERATED - RTRS "

Matthew Graham  :  "WI is 0.674 at the moment"

Matthew Graham  :  "last 5 BTC's 3.16 -- 3.03 3.47 -- 3.71 -- 3.70"

Victor Burek  :  "mg...what we looking for on auction?"

Adam Quinones  :  "WHEN ISSUED 2s at: 0.679% vs. 0.636% OTR"

Adam Quinones  :  "making this auction a gauge of the market's nervousness re: FOMC hawks"

Adam Quinones  :  "im not feeling great about this auction..it will certainly give us a view into the market's bias toward the short-end of the curve...which happens to be the portion of the curve most sensitive to hawkish rhetoric from the FOMC. "

Adam Quinones  :  "how risque of you."

Adam Quinones  :  "running naked eh?"

MMNJ  :  "I am floating a LOT of loans right now....whether I am right or wrong remains to be seen...:)"

Chris Kopec  :  "DU Refi Plus with MI.....a few months ago, you needed to go back to the original servicer for this, but I recall hearing some lenders will now do it regardless or the original servicer. Can someone confirm this."

Adam Quinones  :  "new dashboard has it Ira."

Ira Selwin  :  "Would be cool to see the lock/float from people here based on the perceived risk AQ"

Adam Quinones  :  "Plain and Simple: Although they cut their output forecast, the Fed still expects a noticeable GDP improvement in 2011 from 2010. This uptick in total output is expected to occur without a major recovery in the labor market or an increase in core inflation metrics (no pricing power). This means, if the Fed is right, we will be leaving some folks behind on the road to recovery. That's why I am calling it a "segmented recovery". My point is, the Fed is pretty optimistic about an uptick in activi"

Adam Quinones  :  "here is latest SEP: http://www.mortgagenewsdaily.com/mortgage_rates/blog/184780.aspx"

Adam Quinones  :  "supposedly "

Justin Bayle  :  "will he be taking questions at the press conference?"

Adam Quinones  :  "Bernanke will then share the Fed's updated "Summary of Economic Projections:""

Adam Quinones  :  "12:30 ? The FOMC Statement is released. The announcement is likely to show an unchanged monetary policy, but many questions remain: Is QE2 ending this summer as scheduled? Is the Fed increasingly concerned with inflation risks? How does the Fed view the ongoing recovery? Is commodity-price driven inflation still "transitory"?."

Adam Quinones  :  "11:30 ? Treasury auctions $35,000,000 5-year notes. Competitive bids are cut-off at 11:30 instead of 1:00 to give investors a chance to prepare for the early release of the FOMC statement and the first ever post-meeting press conference with Fed Chairman Ben Bernanke. "

MBS REMINDER: 4/18/2011

Fehler beim Deserialisieren des Textkörpers der Antwortnachricht für Vorgang "Translate". Die maximale Länge für Zeichenfolgeninhalt (8192) wurde beim Lesen von XML-Daten überschritten. Dieses Kontingent kann durch Ändern der "MaxStringContentLength"-Eigenschaft des beim Erstellen des XML-Lesers verwendeten "XmlDictionaryReaderQuotas"-Objekts erhöht werden. Zeile 1, Position 9145.
Fehler beim Deserialisieren des Textkörpers der Antwortnachricht für Vorgang "Translate". Die maximale Länge für Zeichenfolgeninhalt (8192) wurde beim Lesen von XML-Daten überschritten. Dieses Kontingent kann durch Ändern der "MaxStringContentLength"-Eigenschaft des beim Erstellen des XML-Lesers verwendeten "XmlDictionaryReaderQuotas"-Objekts erhöht werden. Zeile 1, Position 9467.

Afternoon Market Updates

A recap of MBS Market Updates provided by MND Analysts and streamed live to the MBSonMND Dashboard.

3:15PM  :  Dance of the Stock Lever Benefits Bond Market

As stocks have rallied this afternoon, bonds have been able to hold relatively sideways near their best levels. It's almost as if bonds "pause" to see if stocks can mount some sort of significant rally into the close, but in recent moments as stocks turned back from their highs, bonds were more than content for the lever to be connected in "rally mode." S&P moved from just over 1306 to 1302.77. With each tick down in stocks, 10yr notes ticked down in yield shortly thereafter, bringing the benchmark to its best levels of the day, currently at 3.363. MBS have been content to progress with the basis. FNCL 4.5's are up 10 ticks on the day now at 102-06. Reprices for the better have come in a constant stream and late day gains could draw out remaining fence-sitters or perhaps even "round 2's" in small amounts.

2:33PM  :  Bonds Pull Back From Best Levels as Stocks Rally

Benchmark 10yr notes had pushed into the 3.36's and FNCL 4.5's made it as high as 102-04 before stocks began rallying, with the S&P making it from 1297+ to 1301.55. In that process, MBS peeled off just one tick and 10yr yields rose to 3.3743. There isn't really any implication on reprices for the better and certainly not a new risk of reprices for the worse. Volume and volatility are dying down as the day gets closer to various closing times.

1:34PM  :  MBS, TSYs Continue to Improve as Stocks Stagnate

The bond market seems to be indicating that the S&P ratings news is a net positive as it increases the sense of urgency regarding budget revisions whereas stocks see it as negative any way you slice it. The S&P at 1298.4 is currently lower than the initial sell-off whereas bonds are at their best levels of the day. FNCL 4.5's are up 8 ticks at 102-04 and 10yr yields are 4.5 bps lower at 3.3688. Reprices for the better continue to trickle in.

12:40PM  :  White House Responds to S&P's US Outlook Downgrade

*WHITE HOUSE SAYS BELIEVES U.S. POLITICAL PROCESS ON DEFICIT WILL OUTPERFORM S&P EXPECTATIONS *WHITE HOUSE SAYS OBAMA BELIEVES A DEAL ON DEFICIT CAN BE REACHED, HISTORY SHOWS REPUBLICANS AND DEMOCRATS CAN WORK TOGETHER * WHITE HOUSE SAYS BOTH SIDES NOW AGREE ON A TARGET OF DEFICIT REDUCTION OF $4 TRILLION OVER 10-12 YEARS * WHITE HOUSE SAYS ANY CALL FOR A BIPARTISAN AGREEMENT ON FISCAL REFORM IS WELCOME, S&P MOVE ADDS MOMENTUM TO THAT * WHITE HOUSE SAYS BELIEVES COMPROMISE BETWEEN REPUBLICANS AND DEMOCRATS ON DEFICIT IS WITHIN REACH

12:38PM  :  ALERT: Reprices Reported as MBS hit New Highs

FNCL 4.5's are now up 6 ticks at their highs of the day, 102-02. 10yr notes are creeping in to their morning low yield range, currently at 3.389. A combination of Fed-Speak and ongoing announcements from the White-House among other things are contributing to the rally. Reprices for the better have been reported and more should follow as this morning's lows occurred slightly before many lenders released rates.

12:06PM  :  IMF on Currency, Global Recovery, Deficit, Oil

* IMF NOTE TO G20 SAYS RECOVERY IN ADVANCED ECONOMIES PROCEEDING 'TOO SLOWLY' * IMF SAYS WITHOUT REBALANCING IN UNITED STATES FROM DOMESTIC TO EXTERNAL DEMAND, GROWTH WILL REMAIN SUBDUED * IMF SAYS POLICY RESPONSE TO OVERHEATING IN EMERGING MARKETS 'REMAINS INADEQUATE' * IMF-CAPITAL INFLOWS TO EMERGING MKTS MODERATED, EVEN REVERSED IN SOME, BUT REMAIN HIGH AND VOLATILE * IMF-SOME EMERGING MARKETS DELAYING NEEDED MACROECONOMIC POLICY RESPONSES TO DEAL WITH CAPITAL INFLOWS * IMF-RESERVE BUILDUP IN SOME ASIAN COUNTRIES LEADING TO 'PERSISTENT, SIGNIFICANT FOREIGN EXCHANGE MISALIGMENTS" * IMF SAYS CHINESE YUAN 'REMAINS SUBSTANTIALLY UNDERVALUED' * IMF: REAL EFFECTIVE VALUES OF EURO AND JAPANESE YEN 'ARE BROADLY IN LINE WITH MEDIUM-TERM FUNDAMENTALS' * IMF SAYS DOLLAR REMAINS 'ON THE STRONG SIDE' OF FUNDAMENTALS * IMF-FURTHER DECLINE IN US DOLLAR AGAINST UNDERVALUED CURRENCIES WOULD HELP CUT US C/A DEFICIT * IMF-RISK OF NEAR-TERM OIL PRICE SPIKES BACK TO 2008 PEAKS 'HAS INCREASED MATERIALLY'

12:02PM  :  Fed's Bullard says U.S. inflation on the rise

LOUISVILLE, Ky., April 18 (Reuters) - The Federal Reserve should not exclude food and energy from the inflation numbers it targets, and those figures have been rising recently, St. Louis Federal Reserve Bank President James Bullard said on Monday.
While he did not explicitly repeat calls for potentially trimming the Fed's $600 billion, bond-buying stimulus program, Bullard did indicate he is beginning to worry about recent inflation readings, bolstered by rising energy costs.
U.S. consumer prices rose 2.7 percent in the year to March, but the core measures, which excludes food and energy prices, climbed just 1.2 percent. But Bullard argued policymakers should target the overall number.
"The 'core' concept has little theoretical backing," Bullard said in a presentation distributed to reporters. "Inflation and inflation expectations have recently moved higher."
Bullard argued the underlying fundamentals for U.S. economic growth are strong despite signs that first quarter economic growth, now seen possibly coming in below 2 percent, looked much weaker than had been expected a few months ago.
U.S. gross domestic product rose 3.1 percent in the fourth quarter. Unemployment, meanwhile, remains at an elevated 8.8 percent, though it has come down rapidly in recent months.
Bullard said the major risks to the economic outlook, including political uprisings in the Middle East and North Africa, and Europe's sovereign debt crisis. would likely dissipate as the year progresses.
Indeed, he expects U.S. job growth, which has been anemic in this recovery, to accelerate over coming months.
Bullard said adopting an explicit inflation target would be a much better way to keep the central bank disciplined than some return to commodity-linked currencies.
"Tying the currency to commodities when commodity prices are highly variable is questionable," he said. (Editing by Neil Stempleman)

11:51AM  :  MBS Back Near Morning Highs

Although Treasuries have not been able to crack in to their best levels of the morning under 3.39, MBS are doing slightly better with FNCL 4.5's currently at 101-31, 3 ticks up on the day. 10yr yields are at 3.408. S&P's seem to be putting in some lows just over 1296 and are currently at 1299.31

11:17AM  :  New MBS Commentary Post

Featured Market Discussion

Matthew Graham  :  "highest non-japan-related MBS prices since January, believe it or not"

Matthew Graham  :  "good day to lock"

Bert Swyers  :  "i will be locking everything before I go home today"

Matthew Graham  :  "once again 10's say no thanks to a foray into 3.38 despite rallying stocks"

Matthew Graham  :  "bonds following this time. at least from lows to recent highs"

Adam Quinones  :  "yeh odd happenings on the curve today....2s/10s steepened up to 280 wide before coming back down to 272"

Adam Quinones  :  "oh the day over day change."

Jason Wilborn  :  "for a minute there they were all +9 ticks"

Jason Wilborn  :  "MG or AQ - I have never seen all the fannie maie coupons be at the same level before"

Matthew Graham  :  "nexbank better"

Kent Mikkola #353976  :  "lemme check... been so busy, forgot the new MIP started today..."

Steve Chizmadia  :  "So Kent if my loan funds at a 55 year LTV, I can offer a FHA 15 year with no MI at closing?"

Jason York  :  "plaza reprice"

Bert Swyers  :  "boa .125 better"

Mike Drews  :  "Wells reprice"

Adam Quinones  :  "1pt on average."

Victor Burek  :  "little over a point"

Ken Crute  :  ".25 improvement here, curious what is everyone seeing as a spread between 4.875 and 4.75?"

Matthew Graham  :  "WHITE HOUSE SAYS LEARNED ON FRIDAY ABOUT S&P'S PLAN TO REVISE U.S. CREDIT OUTLOOK "

Matthew Graham  :  " WHITE HOUSE SAYS NOT RAISING DEBT CEILING WOULD IMMEDIATELY ARREST U.S. RECOVERY, POTENTIALLY CAUSE GLOBAL ECONOMIC PROBLEM "

Alan Craft  :  "FAMC again"

Matt Hodges  :  "GMAC rp"

Bernie  :  "FAMC reprice"

MBS reminder: Upside of declining volume Lock

Translate Request has too much data
Parameter name: request
Translate Request has too much data
Parameter name: request

Afternoon Market Updates

A recap of MBS Market Updates provided by MND Analysts and streamed live to the MBSonMND Dashboard.

3:58PM  : 
Next Week: No Scheduled Data Monday, Busy After That

It's a bit confusing that Monday's date will be 4/11 as it contains very little by the way of the proverbial "411" with no scheduled economic data. But that probably won't matter to most observers, who will be content to get caught up on how the budget drama is panning out. The data picks up on Tuesday and stays strong all week. Each of those 4 days contains at least one top tier release and is flanked by as many as 3 mid-tier releases, not to mention a normal amount of Fed-Speak. Then there's the fresh round of auction supply, which includes 3's, 10's, and 30's, consecutively beginning Tuesday. Some market watchers are looking for TSY's to dig in for some support at a benchmark 10yr yield of 3.60. Looks like today would fit as a potential first step there, and perhaps ongoing stock losses and a "less awful" auction cycle could help. NOTE: that's not a "prediction" by any means, just something to consider as being "at stake" in the week to come. We want you to have a good and relaxing weekend, so we'll discuss the downsides of what's at stake on Monday perhaps!

3:36PM  :  HUD Issues Shutdown Guidance to Housing Counselors

An update from HUD: We know many of you are anxious about where things currently stand with regards to HUD’s Fiscal Year 2011 budget. As we are sure you are well aware, the continuing resolution (CR) under which HUD – along with the rest of the Federal Government – is currently operating, is set to expire tonight. Should the government shut down, most of HUD’s functions would cease. Housing Counseling Agencies should be aware that: •HCS - The Housing Counseling System (HCS) will not be available. Consequently, counseling agencies will be unable to update agency profile information, submit activity data, or otherwise utilize the functionality in HCS.•Counseling Agency Search Functionality - The HUD.GOV website will be available in “Maintenance Mode” only. This means that HUD.GOV will be up but there will be no updates made to pages on the site. As a result, HUD’s website housing counseling search functionality, and similarly HUD’s toll free number to search for counseling services, will still be available to households seeking counseling services. However, with HCS down, the data behind the search functionality will not be updated. •Grant Funds – While the LOCCS system should be functioning, there will be no GTRs to approve requests for disbursements. Consequently, no grant disbursements will occur during a shut down.
•Inquiries – Counseling agencies will not be able to reach HUD staff with inquiries. General inquiries about FHA programs can be directed to 1-800-CALL FHA (1-800-225-5342). However, this call center will have very limited information regarding the Housing Counseling Program and the issue covered in this message.
We hope this is helpful for you to make any preparations that may be necessary in the event that a shutdown does occur. We look forward to an FY 2011 appropriation and the resumption of services as soon as possible.

2:38PM  : 
The Upside of Declining Lock Volume

While lower lock volume implies less business for loan originators, there is an upside in the production slowdown: Loan Pricing isn't deteriorating at the same pace as benchmark Treasury yields. Why? One answer has to do with Supply and Demand in the secondary market. Fewer new lock requests means less new MBS supply in the secondary mortgage market. Less new loan supply in the TBA MBS market (loan pipeline hedging) means less sellers are present. This is a favorable trading environment for all mortgage-backed securities market participants, which explains why MBS have generally outperformed their directional guidance givers (Treasuries) lately. For loan pricing watchers specifically, it lessens the pain of a prolonged bearish trend in benchmark yields.

2:25PM  :  ALERT: Reprices for the Better Reported as MBS Reach New Highs

FNCL 4.5's returned again to challenge levels that were only seen briefly earlier in the day. Instead of bouncing and heading right back down, this time, they've been content to hang out for a bit, prompting several lenders already to release reprices for the better.

1:07PM  :  MBS Test Better Levels Briefly, Then Fall Back to Unchanged

FNCL 4.5's recently made it as high as 101-09 while 10yr yields also tested new lows around 3.57 before both retraced to the same levels that had previously been providing resistance. To be fair, MBS are half a tick higher now at 101-07 vs 101-06+, but 10's are at the same 3.583 level. Things are relatively sideways in a fairly tight range as stocks continue to move very minimally lower.

12:17PM  :  MBS at Best Levels, but Still Meeting Resistance

Stocks have fallen back to unchanged levels on the day and the bond market has finally begun making some microscopic progress. For benchmark 10's, this equates to the best yields of the day, but only slightly lower than previous resistance. Currently they're at 3.583. MBS are also at their best levels of the day but that's merely in line with the same price that has capped out further progress all morning, aka 101-06+ in FNCL 4.5's. That's 5 ticks down on the day, but given where prices came out this morning, it's getting close to being "good enough" for some luke-warm reprices for the better if these levels are either maintained for a few hours or if further progress is made.

11:17AM  :  New MBS Commentary Post

Featured Market Discussion

Andrew Horowitz  :  "now only down 27"

Andrew Horowitz  :  "Dow down 88 and cnbc telling people it is a great buying opportunity"

Andrew Horowitz  :  "113.08 on oil"

David Zilkha  :  "you have to wonder how big the down day will be when it happens. Specially with all that QE2 money floating around. Maybe thats when we will really see a nice impact on rates."

Andrew Horowitz  :  "why could they not have been this resilient during the dot bomb days"

Andrew Horowitz  :  "just a sheer refusal to have a significant down day in stocks, unreal"

Brent Borcherding  :  "Great "Upside" update"

Tom Marchioli  :  "Wonder if they're padding rates due to capacity from layoffs"

Justin Bayle  :  "My wells high balance is about 15bps worse than yesterday"

Bernie  :  "FAMC reprice favorable"

Alan Craft  :  "NYCB better"

Adam Quinones  :  "Wells pricing looks like it got banged up pretty bad today"

Adam Quinones  :  "implies more TSY short sellers in the market."

Adam Quinones  :  "the observation we've noticed this week in TSY futures: an increasing amount of open positions into lower prices with incrementally higher volume tagging along behind. "

Adam Quinones  :  "the quick answer is no."

Brent Borcherding  :  "Yield, AQ."

Adam Quinones  :  "move lower in price or yield ?"

Brent Borcherding  :  "AQ--Is this what it might look like, i.e. the recent losses, if bond traders were reestablishing position to move lower?"

Matthew Graham  :  "Today 10:05 - US HOUSE SPEAKER JOHN BOEHNER SAYS STILL IN DISCUSSIONS OVER US BUDGET DEAL Today 10:05 - US HOUSE SPEAKER JOHN BOEHNER SAYS 'NOT GOING TO ROLL OVER' IN BUDGET DEAL Today 10:06 - US HOUSE SPEAKER JOHN BOEHNER SAYS 'DAMN SERIOUS' ABOUT CUTTING SPENDING"

Adam Quinones  :  "production 4.5 MBS are on a different spot of curve now, further out. Thus coupons are worth less as a result. The question you are asking is relative to the direction of benchmarks. We wrote about how hard it is to determine "VALUE" with so much uncertainty in the market. MBS are actually rich vs. benchmarks right now."

Steven Bote  :  "At these prices, MBS are almost too cheap not to buy, or is inflation/govie shutdown that big a topic on the table?"

Adam Quinones  :  "seems like he is backing off a bit doesnt it?"

Adam Quinones  :  ""Fed overstaying its welcome""

Adam Quinones  :  "he wants to cut QEII"

Chris Kopec  :  "AQ....remind me, is Fisher a dove or a hawk?"

JTB  :  ""Yet""

Adam Quinones  :  "11:45 08Apr11 RTRS-FED'S FISHER - US INFLATIONARY PRESSURES ARE RISING BUT "THEY ARE NOT OUT OF HAND YET"
"

Adam Quinones  :  "11:33 MND- House Minority Whip STENY HOYER (D) says ideological games are "cruel joke" on American people"

Adam Quinones  :  "Boehner is pretty much screwed either way right now."

Adam Quinones  :  "tea party trying its hardest...Paul Ryan gunning for leadership."

Andy Pada  :  "oh man, the politics are really flowing now."

Adam Quinones  :  "yep. consolidation of government agencies = less workers needed."

David Zilkha  :  "what is the effect on a shutdown, or a big budget cut on rates? Wont a big budget cut cause some quick layoffs in govt and an economic slowdown?"