What's on the agenda for this week?
MBS OVERVIEW
Today the MBS (mortgage-backed securities) market will likely be
flat, either slightly improved or slightly worse than it opens, but
not enough to see rates move. MBS are very close to oversold, a
technical indicator that improvement to pricing should be coming this
week. However, the improvement we may see is likely not enough to see
rates improve much at all, possibly .125% and maybe nothing at all.
TODAY'S
EVENTS
There is no economic news today that will affect the MBS markets.
Here are the reports being released through the rest of the week:
What happened last week?
MBS OVERVIEW
Mortgage backed securities (MBS) lost -94 basis points (BPS) from
last Friday's close which caused 30 year fixed mortgage rates to
increase and more than wiped out the prior week's +75BPS gain. The
market saw the lowest rates on Monday and the highest rates on
Friday.
The
"flight to quality" into U.S. bonds primarily due to
concern over the Ukraine helped MBS rally two weeks ago and last week
MBS reversed course as the market's concern over Ukraine cooled off.
This was the primary reason for the big sell off in MBS (which caused
higher rates) on Tuesday. But we got another sell off on Friday which
was due to domestic economic data.
The market
was prepared for a much weaker than expected reading in the Non-Farm
Payrolls. The consensus estimates were for 139K with "whisper
numbers" much lower than that. But the actual results surprised
to the upside with a reading of 175K. Plus, the last two months were
revised upward. This much better than expected labor data caused bond
traders to accept that the Federal Reserve would continue on their
predefined course of "tapering" or reducing the amount of
monthly Treasury and mortgage backed security (MBS) purchases at each
of their meetings. That caused mortgage rates to rise.
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