Bonds Hold Steady as Stocks Soar

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Stocks broke out in a big way today–a fact that may make the relatively ‘unchanged’ bond market performance more palatable.  In bonds’ defense, they did nothing wrong.  The CME open brought a bit of buying.  The NYSE open brought a bit of selling, but the bias remained slightly positive overall with help from the confirmation hearing for new Fed Chair Powell.

Powell didn’t put up with any–well… crap (no better word for it) from Senators seeking to use him for political posturing, but at the same time he didn’t rub their faces in the fact that they were being obnoxious.  He’ll survive this job!  Not only that, but he was more dovish than most expected him to be.  That helped both stocks and bonds heading into mid-day.

After that, bonds and stocks had less in common.  Tax bill headlines suggested things might be moving in a more “passable” direction.  Bonds didn’t like that–nor did they like the rocky 7yr Treasury auction.  The combination resulted in clear selling pressure heading into the afternoon, but not enough to take 10yr yields any higher than 2.342%.  Bonds recovered to end the day unchanged, and that feels like a “win” given the massive improvement in stocks.


MBS Pricing Snapshot

Pricing shown below is delayed, please note the timestamp at the bottom. Real time pricing is available via MBS Live.

MBS

FNMA 3.5

102-27 : +0-00

Treasuries

10 YR

2.3294 : +0.0014

Pricing as of 11/28/17 5:03PMEST

Today’s Reprice Alerts and Updates

2:51PM  :  ALERT ISSUED: Negative Reprice Risk Increasing on Tax Reform Headlines

1:36PM  :  ALERT ISSUED: Bonds Slightly Weaker After Auction; Missile Headlines Traded

12:31PM  :  Conforming Loan Limit Increased from $424k to $453k

10:44AM  :  Holding Modest Gains After Powell’s Balance Sheet Comments


MBS Live Chat Highlights

Matthew Graham  :  “RTRS – CORKER SAYS INTENDS TO VOTE FOR TAX BILL IN BUDGET COMMITTEE GIVEN OUTLINE OF DEAL ON REVENUE TRIGGER”

Matthew Graham  :  “RTRS – REPUBLICAN SENATOR CORKER SAYS HAS OUTLINE OF DEAL WITH FINANCE COMMITTEE LEADERS, MCCONNELL, TO INCLUDE TRIGGER IN TAX BILL TO AUTOMATICALLY RAISE REVENUES IF GROWTH DOES NOT MEET TARGETS”

Caroline Roy  :  “The 2018 loan limits will be applied to Desktop Underwriter
loan casefiles submitted(or resubmitted on or
after the weekend of December 9, 2017. Also note that loan casefiles underwritten through DU prior to December 9 that receive an Ineligible recommendation due only to exceeding the 2017 loan limit may be delivered after January 1, 2018
(or in January 1, 2018 MBS pools). The loan casefile
does not have to be resubmitted to DU if the loan
amount complies with the applicable 2018 loan limit.”

Ira Selwin  :  “But as always – check your individual; investor outlets – that is just from FNMA”

Ira Selwin  :  “JT – not necessarily – Also note that loan casefiles underwritten through DU prior to December 9 that receive an Ineligible recommendation due only to exceeding the 2017 loan limit may be delivered after January 1, 2018 (or in January 1, 2018 MBS pools). The loan casefile does not have to be resubmitted to DU if the loan amount complies with the applicable 2018 loan limit.”

Jason Lowe  :  “JT, I thought that might be the case, but it clearly states casefiles submitted(or resubmitted).”

John Tassios  :  “Jason, it would depend if you re run findings aftr Dec 9th and they indicate updated loan limits. If not, then may have to start new loan and get new findings / new approval”

Ira Selwin  :  “Also – The 2018 loan limits will be applied to Desktop Underwriter (DU®) Version 10.0 and Version 10.1 loan casefiles submitted (or resubmitted) on or after the weekend of December 9, 2017”

Ira Selwin  :  “Hugh – in regards to timing. Using last year as an example, Wells allowed it after Dec 16, so would think we will see similar things this year from the investors”

Caroline Roy  :  “the increase is going to be a game changer for us here. we have so many homes in that low $500 range and the extra $30k is going to help out. plus, if the current tax plan goes through and removes the interest deduction for HELOCs, it should help those folks who had no alternative than to go with the HELOC.”




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