| MBS CLOSE: What The Curve Says About The "Bond" Market
November 5, 2009 at 5:34 pm
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| Posted To: MBS Commentary TOMORROW: NFP at 830AM Wholesale Trade at 10AM Consumer Credit at 3pm Ok... Of course anything can happen tomorrow, and probably will, but at some point in the reasonably near future, a "quantum of solace" should show up to the party... Not talking about your buddy bringing over their "Bond collection," but rather, our "collection of Bond" metrics is suggesting it's almost time to call our much anticipated FLATTENER (short term yields and long term yields become more similar) in as a missing person. What does all that greek mean? If short term and long term yields move closer together, either the long end goes lower, the short end goes higher, or something in between... And although there's plenty of overhead room in short yields that can push the 10yr...(read more) |
| Despite Less MBS Purchases, Fed Still Helping Keep Mortgage Rates Low
November 5, 2009 at 5:04 pm
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| Posted To: MND NewsWire The Federal Reserve today reported on their weekly purchases of agency mortgage-backed securities (MBS). In the five trading days between October 29 and November 4, the Federal Reserve purchased a total of $16.00 billion agency MBS. In those five days the Federal Reserve sold no agency MBS coupons. The Fed's weekly net purchases totaled $16.00 billion. The goal of the Federal Reserve's agency MBS program is to provide support to mortgage and housing markets and to foster improved conditions in financial markets more generally. Only fixed-rate agency MBS securities guaranteed by Fannie Mae, Freddie Mac and Ginnie Mae are eligible assets for the program. The program includes, but is not limited to, 30-year, 20-year and 15-year securities of these issuers. Since the inception of the program...(read more) |
| MBS AFTERNOON: Fixed Income Winding Down As NFP Approaches
November 5, 2009 at 3:31 pm
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| Posted To: MBS Commentary The price action in the 10yr is like a coiling cobra at the moment. A range beset by yesterday's 3.56 snd this AM's 3.515 has gradually narrowed into what must consequently be wherever it is the market wants to be ahead of the NFP report... The cobra's extended body gradually occupies a smaller and smaller footprint as it prepares to strike out... Either direction is possible... It's also possible that he may not see a sufficient opportunity to strike and the movements that undo the coiled position will be less directional... Regardless of that snake in the grass, the supportive-week for MBS has been decidely, well, supportive... As AQ mentioned earlier, we're seeing an uncommon occurrence in that MBS are extending whereas the yield curve is steepening. In plainer and simpler...(read more) |
| Homebuyer Tax Credit is Net Positive, But Not the Universal Solution
November 5, 2009 at 3:10 pm
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| Posted To: Voice of Housing Following a 98-0 vote in the Senate, the House of Representatives has overwhelmingly agreed to pass legislation extending the home buyer tax credit until April 30, 2009. Next the bill will head to the desk of President Obama to be signed into law. No one argues the extension of the tax credit has value to the marketplace. But what other immediate steps must be taken --- either by government or industry --- to create a sustained housing recovery? It is universally expected that interest rates will rise next year when the Fed is expected to stop purchasing MBS next year. How high, how quickly is a matter for debate. What is not debatable is the negative impact of higher rates and an ever shrinking credit box. The extension of the Homebuyer Tax Credit will serve to soften these blows. However...(read more) |
| House Passes Home Buyer Tax Credit Extension. Obama to Sign as Soon as Friday
November 5, 2009 at 2:57 pm
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| Posted To: MND NewsWire The House of Representatives has voted to pass legislation extending the home buyer tax credit until April 30, 2009. Last night the Senate voted 98-0 to pass the legislation. Next the bill will head to President Obama to be signed into law. While the bill extends the $8,000 tax credit for first time home buyers, it also makes available a tax credit to homeowners who have lived in their current residence for at least five years. The credit for these buyers will be capped at $6,500. Income levels will be extended from the current limits of $75,000 for a single purchaser and $150,000 for couples to $125,000 and $225,000 respectively. Above those limits there are diminishing credits available. Housing interests, especially the National Association of Home Builders and the National Association of...(read more) |
| MBS LUNCH: Reprices for the Better Reported
November 5, 2009 at 2:04 pm
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| Posted To: MBS Commentary The 10yr TSY note continues to extend yesterday's range (wait and see mode. READ MBS OPEN )..... Meanwhile...."rate sheet influential" MBS coupons continue to out-peform their benchmark big brothers. In a thinly traded market, the FN 4.0 is +0-08 at 98-14 yielding 4.162% and the FN 4.5 is +0-06 at 101-02 yielding 4.371%. The secondary market current coupon is 4.298%. The current coupon yield is +76/10yr TSY and +60/10yr SWAP. As you can see in the chart below, FN 4.5 prices have recovered all their pre/post-FOMC price losses. Update on the shape of the yield curve. 2s/10s are steeper again! Now at 264 basis points.... If you are wondering...isn't it odd that the yield curve is steeper and "rate sheet influential" MBS coupon yields continue to outperform their benchmarks...(read more) |
| Fannie and Freddie: Mortgage Rates Dip Below 5 Percent Again
November 5, 2009 at 2:02 pm
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| Posted To: MND NewsWire Mortgage rates once again slipped below 5 percent during the week ended November 5 according to data released today by Freddie Mac. Results from the weekly Primary Mortgage Market survey peg the average rate for the 30-year fixed-rate mortgage (FRM) at 4.98 percent, down from an average of 5.03 percent a week earlier. Fees and points averaged 0.7 both weeks. The 15-year FRM averaged 4.40 percent with 0.6 point compared to 4.46 percent also with 0.6 point last week. The five-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) dropped 7 basis points from the previous week's average for an average of 4.35 percent. Fees and points were unchanged at 0.6 point. The one-year Treasury-indexed ARM was at 4.47 percent with 0.5 point. Last week the average was 4.57 percent with 0.5 point....(read more) |
| Fannie Mae Launches Lease Program for Borrowers
November 5, 2009 at 1:36 pm
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| Posted To: MND NewsWire Homeowners who are facing foreclosure may soon be able to remain in their homes for up to a year under a 'Deed for Lease' program announced Thursday by Fannie Mae. Under the terms of the program qualifying homeowners who are not eligible for modifications to their mortgage may be able to sign a lease with the government sponsored enterprise and stay in their homes during a transitional period. Jay Ryan, vice president of Fannie Mae said that the program will help eliminate some of the uncertainty of foreclosure, keep families and tenants in their homes, and help to stabilize neighborhoods and communities. Borrowers who qualify for the program but are not eligible for other foreclosure avoidance programs can transfer their property to the lender through a deed in lieu of foreclosure...(read more) |
| Mortgage Rates Hold in Range. Locking Still Favored Over Floating
November 5, 2009 at 1:15 pm
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| Posted To: Mortgage Rate Watch The Federal Reserve released their statement on monetary policy and economic outlook yesterday. Although there were some changes to the text of the statement, markets got what they were expecting. The FOMC held the Fed funds rate at its current level and gave a cautiously optimistic outlook on the economy. After some early morning weakness. prices of mortgage backed securities improved after Fed statement and closed basically unchanged on the day. Unfortunately, falling prices early in the session led some lenders to reprice for the worse. However, some, not all, lenders repriced for the better later in the day. If you would like to read more on the Fed statement, check out AQ’s analysis. READ MORE . I also recommend reading the MBS OPEN for an in-depth discussion on how the Fed's...(read more) |
| MBS MORNING: Explaining Yield Spreads and the Curve
November 5, 2009 at 12:26 pm
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| Posted To: MBS Commentary Lets do a quick recap of yield spreads... Debt issued by the US Government (Treasury bills, notes, and bonds) is considered to be the highest credit quality....also known as 'Risk Free'. These 'RISK FREE' securities (TSY bills, notes, and bonds) are the foundation for all other interest rates. This is why Treasury securities are called 'benchmarks'. All other debt issued is considered to be less quality than US Treasuries. To compensate for higher risk of investing, because other debt is considered lower quality than US Treasuries, all other debt trades at a premium over the 'risk free' rate. This is referred to as a 'yield spread' over a comparable benchmark. Comparable means: of similar maturity. For example you would compare the returns of a 10yr municipal...(read more) |
| Jobless Claims Improve. Temporary Hiring Adds Volatility to Data
November 5, 2009 at 10:25 am
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| Posted To: MND NewsWire The Department of Labor this morning released the Unemployment Insurance Weekly Claims report, also known as Jobless Claims. This data set tracks new filings for unemployment insurance benefits and the number of Americans who continue to receive state unemployment benefits (called continuing claims or insured unemployment). The fact that this data is released on a weekly basis makes it very appealing to traders and economists as it provides a week over week view into the health of the domestic labor market. Trader's and economists are looking for hints for answers to questions like: Are jobs being created? Are jobs being lost? Does the trend indicate more job losses ahead? Does the trend indicate firms are expanding and hiring more in the process? Consumers drive output of goods and services...(read more) |
| Fed Funds Unchanged; Results from GMAC, Radian; Updates from Fannie, UBOC, USB
November 5, 2009 at 9:47 am
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| Posted To: Pipeline Press Yesterday was a special day. In the late afternoon I visited Costco, which some people feel simultaneously represents everything that is both bad and good about the retail channel. The change in time over the weekend had made it so the setting sun showed through the front entrance, illuminating the Samsung 46 inch plasma, the flannel shirts, AND the pre-lit Christmas tree boxes all at once. It was a tender moment. What are Fed Funds? These are cash balances held by banks with their local Federal Reserve Bank, typically involved in an "inter-bank sale" of a Fed fund deposit for one business day - overnight. And the Fed Funds Rate is the overnight interest rate charged by those banks with excess reserves on hand. Why would this impact the mortgage rate that James & Jen Borrower...(read more) |
| MBS OPEN: Rates Sideways After Data. Wait and See Mode...
November 5, 2009 at 9:24 am
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| Posted To: MBS Commentary Recap of Yesterday... ADP Employment Report: -203,000 jobs in October vs. revised for better -277,000 cuts in September. October read better than expected. Treasury Refunding Announcment: $81bn in TSY supply next week. $40bn 3yr notes, $25bn 10s, and $16bn 30s. 10yr note sales $1bn more than expected..TSY extending duration of portfolio Bankruptcy filings +8.9% in September vs. +4.1% in August. +27.9% year over year FOMC makes a few changes to statement, does not alter verbiage "for an extended period". I wrote lengthy discussion on what the text is telling us and how it relates to mortgage rates. READ MORE Senate Passes Homebuyer Tax Credit Extension 98-0. Goes to House for vote. READ MORE FHA delayes the release of their internal audit...says inaccuracies in study's econometric...(read more) |
| The Day Ahead: Stock Futures Lower Before Jobless Claims and Productivity Data
November 5, 2009 at 8:08 am
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| Posted To: MND NewsWire The US Senate OK’d an extension of the first-time home-buyer tax credit that was to expire at the end of this month. If the house approves the Senate bill, the incentive would expire six months into 2010. In addition, the program will allow homeowners who have lived in their current home for more than five years to receive a $6,500 tax credit to purchase a new primary residence. READ MORE The Senate bill also includes an extension of unemployment benefits for states with jobless rates of 8.5% or higher. In those states, individuals will be eligible for an additional 20 weeks of benefits. On to markets . . . After ending the day with mixed results yesterday, Thursday is set to open with similar sentiment. Equity futures are looking slightly down ahead of the weekly jobless claims report...(read more) | | | 
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