Mortgage News Daily

MBS RECAP: 2/24/2012

Matthew Graham — Fri, 24 Feb 2012 21:17:22 GMT

MBS Live : MBS RECAP Open MBS Live Dashboard FNMA 3.5 103-13 : -0-01 FNMA 4.0 105-08 : -0-01 FNMA 4.5 106-18 : -0-02 FNMA 5.0 108-00 : -0-02 GNMA 3.5 104-26 : -0-02 GNMA 4.0 107-20 : -0-02 GNMA 4.5 108-31 : -0-02 GNMA 5.0 110-20 : -0-03 FHLMC 3.5 103-05 : -0-01 FHLMC 4.0 104-29 : +0-00 FHLMC 4.5 106-05 : -0-01 FHLMC 5.0 107-20 : -0-02 Pricing as of 3:59 PM EST Afternoon Market Updates A recap of MBS Market Updates provided by MND Analysts and streamed live to the MBS Live Dashboard . 3:10PM : ALERT: MBS Hit Lows of the Day. Negative Reprice Risk Slightly Increased One of those "early warning" alerts that may or may not materialize... A "heads up" if you will... Fannie 3.5's are grinding against their lows of the day for no particular reason other than the normal sorts...(read more)

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Mortgage Rates Improve For Third Straight Day

Matthew Graham — Fri, 24 Feb 2012 20:44:00 GMT

Posted To: Mortgage Rate Watch

After beginning the week in significantly worse shape, Mortgages Rates finish the week having fought back in small increments against that weakness in each of the past three sessions. The losses on Tuesday (which was the beginning of the week due to the President's Day holiday) brought Best-Execution rates for 30yr Fixed Mortgages to 4.0% on average. That was the first time in almost month! But rates slowly fought their way back down to a point where 3.875% once again is the Best-Execution rate for the majority of lenders in our survey. Read more about what that means in this previous post with more detailed discussion about Best-Execution calculations . We were prepared for some volatility today, primarily due to the inception of Greece's private sector debt swaps, wherein Greece would officially...(read more)

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MBS and Treasuries Continue Trading In Morning's Narrow Ranges

Matthew Graham — Fri, 24 Feb 2012 18:16:00 GMT

Posted To: MBS Commentary

So far, today has been a serious snoozer for bond markets. Volume is low and volatility is all but absent as 10yr notes and production MBS continue trading in the same ranges seen this morning. There was a brief moment of exception to this fact on the announcement that Greece's debt swap had formally started, but this was limited to 10yr yields only, which have operated between 1.99 and 1.97 all day. MBS have been exclusively within 103-13 and 103-18 in Fannie 3.5's. The chart below from MBS Live shows the brief foray outside the range for 10yr yields. (source: MBS Live Dashboard ) It should be noted that the true break in the range came not on the announcement itself, but on IIF's Dallara commenting that Greece's potential use of collective action clauses raises concerns for other sovereign...(read more)

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NAR Optimistic about Commercial Market, "A Landlord's Market"

Jann Swanson — Fri, 24 Feb 2012 16:57:55 GMT

Posted To: MND NewsWire

Multi-family rentals are leading the recovery in the commercial real estate market, becoming what the National Association of Realtors® (NAR) calls "a landlord's market commanding bigger rent increases." NAR, in its quarterly commercial real estate forecast said that all of the major commercial real estate sectors are seeing improved fundamentals, but seems most bullish about the multi-family sector. NAR is projecting that vacancies in the apartment rental market is likely to drop from 4.7 percent in the first quarter of 2012 to 4.5 percent in the first quarter of 2013. Multifamily vacancy rates below 5 percent are generally considered to indicate a landord's market with demand justifying higher rents. Rents did increase an average of 2.2 percent last year and are expected to rise 3.8 percent...(read more)

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New Home Sales Fall 0.9% in January

Jann Swanson — Fri, 24 Feb 2012 16:55:35 GMT

Posted To: MND NewsWire

New home sales in January were at a seasonally adjusted annual rate of 321,000, a decrease of 0.9 percent from the upwardly revised December rate of 324,000. The December pace of new home sales was originally estimated at 307,000. Estimated sales in January were at a rate 3.5 percent higher than one year earlier when sales were running at 310,000 units. The U.S. Census Bureau and the Department of Housing and Urban Development released the numbers Friday. An estimated 22,000 new homes were sold during January. About half (10,000 homes) were completed when sold; the remaining 12,000 were equally divided between homes under construction and homes for which construction had not yet begun. These numbers have been virtually unchanged since November and are nearly identical to those in January 2011...(read more)

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MBS MID-DAY: 2/24/2012

Matthew Graham — Fri, 24 Feb 2012 16:17:15 GMT

Posted To: MBS Commentary

MBS Live : MBS MID-DAY Open MBS Live Dashboard FNMA 3.5 103-16 : +0-02 FNMA 4.0 105-10 : +0-01 FNMA 4.5 106-20 : +0-00 FNMA 5.0 108-02 : -0-01 GNMA 3.5 104-28 : +0-01 GNMA 4.0 107-21 : -0-01 GNMA 4.5 109-01 : +0-00 GNMA 5.0 110-23 : -0-01 FHLMC 3.5 103-08 : +0-02 FHLMC 4.0 104-30 : +0-01 FHLMC 4.5 106-07 : +0-01 FHLMC 5.0 107-21 : -0-01 Pricing as of 11:02 AM EST Morning Market Updates A recap of MBS Market Updates provided by MND Analysts and streamed live to the MBS Live Dashboard . 10:34AM : MBS Hold Gains Following Econ Data. Low Volatility Both in terms of implied and realized volatility, things continue to be calm for bond markets this morning. 10yr yields have held inside a range that's just slightly wider than ONE basis point. (1.977 - 1.99) and are currently testing the lower end...(read more)

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MI Companies Watching for the FHA MIP Increase; BofA and Fannie - Does it Matter?

Rob Chrisman — Fri, 24 Feb 2012 14:58:54 GMT

Posted To: Pipeline Press

"First wash all the cars, then wax." "Why do I have to..." "Remember deal. No questions." "Yeah, but..." "Wax on right hand. Wax off left hand. Wax on, wax off. Breathe in through nose, out through mouth. Wax on, wax off. Don't forget to breathe. Very important." Wax on, wax off, risk on, risk off. Fixed income traders here in the U.S. love to talk about the "risk on, risk off" trade. What does that mean? Traditionally, whenever there is risk, the majority of investors will put their money into a safe place. And for bond folks, this is usually the U.S. fixed-income markets. So when things are going awry overseas, money tends to come into the U.S debt markets , which includes mortgage-backed securities, pushing prices higher and rates lower. That doesn't necessarily mean every LO should be rooting...(read more)

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Bank of America Cuts Pipeline to Fannie Mae

Jann Swanson — Fri, 24 Feb 2012 14:08:32 GMT

Posted To: MND NewsWire

Bank of America, Corp will stop selling new mortgages to Fannie Mae as the result of a dispute over the way Fannie Mae is handling repurchases. In November Bank of America said it would not cooperate with a new Fannie Mae policy that would require it to take back loans if an insurer dropped coverage. The Bank of America and the government-controlled mortgage giant are in talks to resolve the dispute according to a Bloomberg source but the Bank will cut off the loan supply this month. Bank of America told its investors last August that Fannie Mae's policies on private mortgage insurance cancellations or rejections might result in higher repurchase expenses for the Bank. The numbers of companies that write this insurance have been dwindling. One of the largest insurers, PMI Corporation, was seized...(read more)

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The Day Ahead: Fed Speakers, Greek PSI, and Some Economic Data

Matthew Graham — Fri, 24 Feb 2012 05:43:00 GMT

Posted To: MBS Commentary

In terms of economic data, the day kicks off with the more important of the two reports offered: Consumer Sentiment at 9:55am. The forecast calls for a minor improvement 72.5 to 73.0. Mere minutes later at 10am is the New Home Sales report, expected to show an improvement from 307,000 to 315,000. While housing/mortgage-related economic data is always interesting for copy-room conversation, we've come to be almost completely dismissive of the market-moving capabilities of any report with the words "home sales" in the title, with "new" being even less exciting than "existing." That's not to say that markets will not move today. In fact, quite a bit of volatility is possible, even if it's not probable. Greece theoretically kicks off their efforts toward Private Sector Involvement in the current...(read more)

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MBS Market Technical Factors: Dollar Rolls

Bill Berliner — Fri, 24 Feb 2012 00:27:03 GMT

Posted To: Secondary Markets

Previously we discussed the technical factor convexity. Another set of technical factors that impact secondary managers are in the dollar roll market that we discussed a few weeks ago. Dollar rolls (i.e., the price difference between the same security for different months’ delivery) are impacted by a number of factors. First consider the different participants in the MBS markets. Originators are generally selling their production for later months, given the factor that rate locks are taken under the understanding that the loans will fund at some point in the future. That means that there is systemic selling pressure in the later (or “back”) months.

Alternatively, some investors (such as banks) want to buy MBS for early settlement, since they can only begin to accrue coupon earnings once they own settled securities. Finally, CMO desks (i.e., the units in broker/dealers that structure and market agency CMOs) have a structural need to buy various types of agency passthroughs for current-month settlement in order to settle their deals. (That’s why CMO traders refer to passthrough pools as “collateral;” to them, they’re just fodder for deals.)

The combined impact of back-end selling and early-month demand means that dollar roll levels are often rich (or “special”) to where they should trade based on fundamental factors such as funding rates and short-term prepayment speeds. The specialness of rolls is often exacerbated during periods of heavy issuance of MBS and/or CMOs. Investors that have the option of buying front- or back-month settlement (such as money managers) can often take advantage of dollar roll specials to effectively gain cheap financing for their MBS holdings. (I’ve had investors tell me that dollar-roll levels were the single biggest factor in choosing what MBS coupons to hold.)

The other factor impacting rolls, which is important to secondary managers, is the fact that rolls far out in settlement often trade erratically. Broker screens often will show three delivery months, i.e., the current month, plus the next two back months. That means that up until notification day, the current month and the next two months will be on the screen. For example, levels for February, March, and April were shown as a delivery month until after last Thursday (2/9); after that, February was removed and May was added. Prices for May then moved roughly back in line with other months; April/May rolls went from trading at around 14/32s to around 10/32s.

This means that secondary managers that sold TBAs for May settlement simply because they had a lot of long-term locks in their pipelines traded inefficiently. It would have been much better for them to have continued to sell April TBAs until May actually were added to broker and TradeWeb screens. At that point, they should look at their pipelines and adjust their positions to account for their expected fundings for each month. A healthy respect for the market’s technical conditions will often help lenders improve their hedging efficiency and secondary results.

...(read more)

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MBS Market Technical Factors: Explaining Duration and Convexity

Bill Berliner — Fri, 24 Feb 2012 00:23:07 GMT

Posted To: Secondary Markets

In a few recent columns, we’ve talked about duration and convexity in the context of changing market prices. They are some of the most misunderstood and misused terms in finance, and clarifying them is probably worth a few column inches. I won’t focus here on how to calculate the measures, but rather helping readers understand what they tell us about a bond’s expected price performance.

As I described last week, portfolio managers holding MBS need to undertake convexity buying and selling as interest rate levels change; the duration of their portfolio is changing with rates, although the changes are the opposite of what a portfolio manager would normally do as rates move. In a bond market rally, a rational PM would look to extend his/her duration in order to get the maximum benefit from rising bond prices; in a selloff, the PM would shorten the portfolio’s duration in order to minimize his/her exposure to declining bond prices. Because of prepayments, however, the opposite is happening.   Rising rates imply lower levels of prepayments and longer MBS durations, meaning that without adjustments the portfolio’s value would become more sensitive to changing rates. A decline in interest rates, alternatively, means that prepayments are increasing, shortening the duration of MBS and forcing PMs to buy bonds in the face of higher prices.

Let’s take a more technical look at these two measures. Duration is the sensitivity of a bond’s price to changes in its interest rate or, more precisely, the yield to which it is being valued. The easiest way to envision a bond’s duration is as a downward-sloping line where the horizontal axis shows the bond’s yield and the vertical axis its price. As the yield rises, the bond’s price declines, and vice versa. If charted, the duration is approximately a straight line; this is the case when the bond being evaluated does not have any type of option attached to it.

Convexity is a second-order measure of a bond’s expected price performance. The chart below shows the durations of two different bonds. One is a fixed-cash-flow bond (such as a Treasury note or non-callable corporate debenture), and the other is a mortgage-backed security, where the bondholder is short a series of options (due to the borrowers’ option to refinance their mortgages).   Note that the line is curved for the MBS. The degree of curvature of a duration function is its convexity; since MBS are negatively convex, the line is lower than the straight line at higher and/or lower rate levels, i.e., the “wings.”    (This relationship occurs because of changing prepayment expectations for the MBS.    Note that if you owned a “put-able” bond, its price performance would exceed the straight line as rates, and the bond would be considered positively convex.)

The key implication is that a bond’s duration changes, to different degrees, as rates change. Convexity describes how much the value of a bond (or a bond portfolio) will deviate from the roughly straight line represented by its duration.    A good way to get a handle on the concepts is to compare them to examples in the physical world. Duration is the equivalent of speed, which is a first-order measure of movement—it is measured in miles per hour, feet per second, etc. Convexity is the equivalent of acceleration; it is measured in feet per second per second, and is the rate of change of the rate of change.

A fun example is to pretend to be a judge in traffic court. Imagine that you have two cases being argued before you (bad drivers need to hire lawyers) where the drivers got speeding tickets for being timed at 60 MPH in a 55 MPH zone. If you’re inclined to give drivers a 5 mph “fudge factor,” do you have enough information to decide these cases?

The answer is that you don’t have enough information. In this example, one car was traveling at a constant 60 MPH, and never drove faster than 5 MPH above the speed limit. The other began from a standing stop, and was going over 100 MPH when it passed the policeman. Since “speed” is calculated as a function of time (remember from high school that Rate =Distance/Time), being told that the drivers were traveling at 60 MPH doesn’t tell you much about their actual behavior. Like speed, duration is a useful but incomplete measure for describing a complex phenomenon.

The other thing to note is taking duration and convexity into account still does not entirely explain a bond’s price performance. Both duration and convexity are calculated using fairly rigid assumptions—unchanged spreads, no changes in the shape of the yield curve, etc. Therefore, even the inclusion of convexity in the conversation does not account for all the reasons that a bond’s price changes and out- or underperforms a benchmark. A common mistake is to observe a bond underperforming its hedge ratio in a rally and assume that it underperformed because of “negative convexity.” In reality, the underwhelming relative performance may be due to spread widening rather than convexity.    There’s a simple way to view this difference: Price changes due to duration and convexity mean that you’re moving up and down the price line shown above; spread widening means that the line itself is shifting up or down. That’s why models have so-called attribution functions that will analyze data from two different dates and tell the user how much of the price change is attributable to different factors such as duration, convexity, spread, etc.

...(read more)

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MBS RECAP: 2/23/2012

Matthew Graham — Thu, 23 Feb 2012 21:17:09 GMT

Posted To: MBS Commentary

MBS Live : MBS RECAP Open MBS Live Dashboard FNMA 3.5 103-15 : +0-04 FNMA 4.0 105-09 : +0-02 FNMA 4.5 106-20 : +0-01 FNMA 5.0 108-02 : +0-01 GNMA 3.5 104-28 : +0-03 GNMA 4.0 107-21 : +0-02 GNMA 4.5 109-02 : +0-02 GNMA 5.0 110-23 : -0-04 FHLMC 3.5 103-07 : +0-03 FHLMC 4.0 104-30 : +0-03 FHLMC 4.5 106-06 : +0-02 FHLMC 5.0 107-22 : +0-01 Pricing as of 4:02 PM EST Afternoon Market Updates A recap of MBS Market Updates provided by MND Analysts and streamed live to the MBS Live Dashboard . 1:10PM : ALERT: Stunning 7-Yr Treasury Auction Sends MBS Higher Today's 7 yr auction was incredibly strong and has incited a big volume move down under 2% in 10yr notes. MBS are following the positivity for the most part, but the current glory is going to the the Treasury complex considering this is their victory...(read more)

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Increased Sales Activity not Reflected in Home Prices

Jann Swanson — Thu, 23 Feb 2012 21:01:04 GMT

Posted To: MND NewsWire

Radar Logic's RPX Composite price for 2011 reached its lowest point in December since the housing crisis began. The Composite, which tracks housing prices in 25 major U.S. metropolitan areas, fell 6.8 percent during the year ended December 22 to $173.76 per square foot , a price last seen in February 2003. This decline was driven by an 8 percent decrease in home prices in what Radar Logic calls the traditional market, i.e. non-distressed sales. The latter contributed less to the decline by comparison as prices for foreclosures have declined just 5 percent during the same period. The average distressed home now sells at a price 39 percent lower than other sales. Sales activity in the traditional market increased 32 percent on an annual basis and distressed sales declined from 30 percent of total...(read more)

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Mortgage Rates Continue Slow, Steady Improvements

Matthew Graham — Thu, 23 Feb 2012 20:46:00 GMT

Posted To: Mortgage Rate Watch

Mortgages Rates continued to improve at a slow and steady pace. After rising somewhat abruptly into the end of last week and beginning of the current week, rates began to fight back yesterday, but the improvements have been and continue to be relatively minor. This leaves plenty of lenders still best-priced at 4.0%, but with a few more falling back into 3.875% Best-Execution levels today. In short, we're on the same fence as yesterday, but in a slightly more comfortable position. Additional reading: P revious post with more detailed discussion about Best-Execution calculations . We spoke yesterday about the end of the week's Treasury auction cycle being a net positive for MBS, the Mortgage-Backed Securities that most directly influence mortgage rates. This was indeed the case, but bond markets...(read more)

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FHFA Monthly HPI adds Positive Spin to Negative Quarter

Jann Swanson — Thu, 23 Feb 2012 19:00:58 GMT

Posted To: MND NewsWire

While the Federal Housing Finance Agency's ( FHFA ) purchase only House Price Index (HPI) was down slightly in the fourth quarter, data for December indicates that the situation may have begun to reverse. Fourth quarter figures released Thursday show that the HPI decreased 0.1 percent on a seasonally adjusted basis from the third quarter and 1.1 percent on an unadjusted basis. However the monthly data released at the same time show that December prices increased 0.7 percent from November on an adjusted basis and were flat on an unadjusted basis. The HPI fell 2.4 percent on an annual basis from the level in Q4 2010. FHFA said that during the same period the cost of other goods and services rose 4.0 percent so the inflation adjusted price of homes fell approximately 6.2 percent over the four...(read more)

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Volker Rule's Impact on Hedging Rate Locks; Potential HARP 2.0 Borrower Pool Defined

Rob Chrisman — Thu, 23 Feb 2012 16:59:14 GMT

Posted To: Pipeline Press

Money is money, right? If Congress can place a " mortgage tax " in the form of higher g-fees, and use the money to help cover a payroll tax waiver extension, can the states use the mortgage servicer settlement money to pay for chalk in classrooms ? How much is $1 trillion? One thousand million is a billion, and one thousand billion is a trillion. According to Business Week, outstanding student debt in the United States is approaching $1 trillion-that is $3,333 per head for our population of about 300,000,000. Is this an example of living beyond one's means? The Federal Reserve noted in a White Paper last month that the current mortgage lending standards are holding back younger first-time homebuyers. Student debt has, for the first time in the US, surpassed credit card debt, with recent university...(read more)

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MBS MID-DAY: 2/23/2012

Matthew Graham — Thu, 23 Feb 2012 16:17:05 GMT

Posted To: MBS Commentary

MBS Live : MBS MID-DAY Open MBS Live Dashboard FNMA 3.5 103-09 : -0-02 FNMA 4.0 105-06 : -0-02 FNMA 4.5 106-18 : -0-01 FNMA 5.0 108-00 : -0-02 GNMA 3.5 104-22 : -0-03 GNMA 4.0 107-16 : -0-03 GNMA 4.5 108-30 : -0-03 GNMA 5.0 110-20 : -0-07 FHLMC 3.5 103-02 : -0-02 FHLMC 4.0 104-27 : -0-01 FHLMC 4.5 106-05 : +0-01 FHLMC 5.0 107-20 : -0-01 Pricing as of 11:01 AM EST Morning Market Updates A recap of MBS Market Updates provided by MND Analysts and streamed live to the MBS Live Dashboard . 10:08AM : FHFA: House Prices Fall 0.1% in Q4 2011 U.S. house prices fell modestly in the fourth quarter of 2011 according to the Federal Housing Finance Agency’s (FHFA) seasonally adjusted purchase-only house price index (HPI). The HPI, calculated using home sales price information from Fannie Mae-and Freddie...(read more)

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MBS Unchanged, Near Yesterday's Highs Following Morning Data

Matthew Graham — Thu, 23 Feb 2012 15:33:00 GMT

Posted To: MBS Commentary

This morning's release of weekly Jobless Claims data turned out to be a relative non-event as the 351k claims perfectly matched last week's numbers (revised from 348k to 351k). Because today's report covers the same time period as the "survey week" for the next Non-Farm Payrolls report, it stood a chance to be more important than usual, but that importance seems to have been sapped by the flat results and slight upward revision of the previous week. Beyond that, the only other economic data this morning was FHFA's House Price Index which showed a 0.1% decline in home prices in the fourth quarter of 2011. The more significant market movers this morning have been of the unscheduled variety. After Jobless Claims failed to prompt a break of the important 2.045 technical level, bond markets improved...(read more)

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Mass Court May Rule on Retroactivity of some Foreclosures Tied to 'Naked Mortgages'

Jann Swanson — Thu, 23 Feb 2012 15:17:00 GMT

Posted To: MND NewsWire

Another next major marker in the convoluted foreclosure landscape will probably come in the next few weeks when the Massachusetts Supreme Judicial Court (SJC) is expected to rule on Eaton v. Federal National Mortgage Association (Fannie Mae). This is another in a series of cases challenging the right of various lenders and nominees to foreclose on delinquent mortgages based on assertions that those parties do not own or at least cannot prove they own the enabling legal documents. Eaton raises an additional point that has excited interest - whether or not that foreclosure can be challenged and compensation enforced on a retroactive basis or whether such retroactivity exacts too high a cost or permanently clouds title. The details of the case are fairly standard, involving a note given by Henrietta...(read more)

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The Day Ahead: Most Significant Economic Report and Final Auction

Matthew Graham — Thu, 23 Feb 2012 05:00:00 GMT

Posted To: MBS Commentary

Wednesday ended on a positive note for Mortgage-Backed Securities and Treasuries after uneventful economic data in the morning, a reasonable 5yr Note Auction in the afternoon, as well as a bit of a push back against Tuesday's Greek-bailout-inspired positivity (that's "positivity" in a broad economic sense, the kind that favors stocks and tends to hurt bond markets). Looking at 10yr Notes as the most usual of suspects when it comes to benchmarking movements of broader bond markets, we see some interesting patterns in the week of trading so far. Early yesterday morning, they backed up to Tuesday's high yields before beginning their somewhat brisk counterattack lower in yield, eventually breaking past 2% later in yesterday's session. The characteristically low volume open of the following day...(read more)

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MBS RECAP: 2/22/2012

Matthew Graham — Wed, 22 Feb 2012 21:16:03 GMT

Posted To: MBS Commentary

MBS Live : MBS RECAP Open MBS Live Dashboard FNMA 3.5 103-12 : +0-13 FNMA 4.0 105-08 : +0-08 FNMA 4.5 106-19 : +0-05 FNMA 5.0 108-02 : +0-04 GNMA 3.5 104-27 : +0-13 GNMA 4.0 107-22 : +0-07 GNMA 4.5 109-03 : +0-06 GNMA 5.0 110-29 : +0-03 FHLMC 3.5 103-05 : +0-13 FHLMC 4.0 104-28 : +0-08 FHLMC 4.5 106-06 : +0-07 FHLMC 5.0 107-22 : +0-05 Pricing as of 4:00 PM EST Afternoon Market Updates A recap of MBS Market Updates provided by MND Analysts and streamed live to the MBS Live Dashboard . 2:42PM : ALERT: Favorable Technicals For Bond Markets. Additional Positive Reprices We say "additional positive reprices" both in the sense that additional reprices have been reported since the last update and that there's ongoing potential for additional positive reprices at current levels. This afternoon's strength...(read more)

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Mortgage Rates Improve But Remain On Fence Between Recent Offerings

Matthew Graham — Wed, 22 Feb 2012 21:07:00 GMT

Posted To: Mortgage Rate Watch

Yesterday marked the first time since late January that Best-Execution Mortgages Rates stood at 4.0% on average, as opposed to what had been the prevailing average of 3.875%. Rates improved today for most lenders, several of whom once again are offering 3.875% as a "best-execution rate" (learn more about what that means in this previous post with more detailed discussion about Best-Execution calculations ). But a significant portion of the market remains in 4.0% territory. Best-Execution is very much on a fence between the two rates after today's improvements. Apart from the slightly more favorable rate environment, little has changed between yesterday and today. Since Best-Execution is by no means firmly back to 3.875%, the question remains whether or not this will prove to be a brief foray...(read more)

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Freddie Mac: Economy on Slow, Steady, Path to Recovery

Jann Swanson — Wed, 22 Feb 2012 20:40:44 GMT

Posted To: MND NewsWire

In the February Economic Outlook from Freddie Mac's Office of the Chief Economist is projecting a slow, steady path to recovery as the economy, it says, continues to build on the momentum it displayed at the end of last year. The report cites 243,000 new jobs in January, an unemployment rate falling to 8.3 percent and an increase in job openings to 3.4 million in December as indications of improvement. At the same time, there was a relatively low level of 2 million "voluntary separations," i.e. people quitting their jobs, that reflects a nervousness about the job market and a 1.2 percent drop in inflation-adjusted hourly wages, the steepest annual fall since 1989, also signaling job market weakness. The housing sector portion of the Freddie Mac report was a summary of information for the month...(read more)

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A Call to Action - FHFA’s Strategic Plan for Fannie Mae and Freddie Mac

Brian O'Reilly — Wed, 22 Feb 2012 19:47:56 GMT

Posted To: Voice of Housing

Yesterday the Federal Housing Finance Agency (FHFA) issued to Congress its Strategic Plan for Fannie Mae and Freddie Mac Conservatorships. Acting Director DeMarco and FHFA staff are to be soundly commended for their work in developing and publishing the Plan. The Plan is equally thoughtful and provocative and represents an essential next step in the continuing efforts to resolve the nation’s housing crisis. For example, the Plan acknowledges the critical importance of the technical and business infrastructures currently maintained and managed by the GSEs and without which the effective function of secondary market securitizations would be impossible. Likewise, the Plan notes the critical role of both GSEs in the nation’s continuing efforts to resolve the foreclosure crisis and maintain...(read more)

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MBS, Treasuries Extend Gains, Giving Pause to Technical Gloom

Matthew Graham — Wed, 22 Feb 2012 18:56:00 GMT

Posted To: MBS Commentary

From a technical standpoint, the past few sessions have been a fairly gloomy scene for MBS and Treasuries--our two representatives from those camps being Fannie 3.5 30yr Fixed MBS and good old 10yr Treasury Notes. The technical gloominess should be fairly evident in the upper sections of each chart below. In short, both MBS and 10's had moved weaker beyond the limits of long-term trend channels and were at risk of breaking beyond horizontal levels as well. For Fannie 3.5's, the first major break of a horizontal level at 103-10 was seen Friday on an intraday basis, but prices made it back by the end of the day. Yesterday's trading suggested the breakout more firmly as prices fell to the next major pivot around 103-00. It was (and still is) up to today's price action to reiterate or refute that...(read more)

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