Impressionable Bonds Hit by Central Bank Comments and Issuance


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Low volume and lighter-than-normal liquidity left US bond markets more impressionable than normal today.  Or perhaps it IS normal given that it’s a data-free Monday in the middle of May and the day after Mother’s Day.  Those details would logically keep a few extra traders out of the office.

Fewer traders means each trader accounts for a bigger-than-normal piece of the pie.  Thus, light liquidity can increase volatility if said traders are trying to get somewhere in terms of trading levels.  That wasn’t necessarily the case today, but bonds were nonetheless influenced more than they otherwise might have been by some central banker comments and by bond issuance.

The central bank in question is European this time around, as ECB’s Villeroy talked hawkishly about how the ECB would ultimately begin winding down stimulus.  This was a bigger deal for European bond markets, logically, but domestic markets took a hit as well.  Later in the domestic session, corporate bond issuance added pressure to Treasuries.  Finally, tradeflows and technicals kicked-off an afternoon drift that took 10yr yields over 3.0%.

MBS Pricing Snapshot

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


FNMA 3.5

98-28 : -0-07


10 YR

3.0024 : +0.0314

Pricing as of 5/14/18 4:28PMEST

Today’s Reprice Alerts and Updates

3:57PM  :  ALERT ISSUED: Negative Reprice Risk Increasing For a Few Lenders

10:22AM  :  ALERT ISSUED: Bonds Hit by European Central Bank Warning

MBS Live Chat Highlights

Clayton Sandy  :  “well, my work here is done. Good night, everybody”

Dominick Cordone  :  “love when a plan comes together”

Edie Clark  :  “You are right, Clayton!!! There are 6 units, one person owns 3 but is selling all three. One of the three is closing next week, so my Condo Sale should work because that leaves just two and my Client will be purchasing one of the two. Thank you so much!!!”

Clayton Sandy  :  “5-20 can own 2 units”

Clayton Sandy  :  “Projects in which a single entity (the same individual, investor group, partnership, or corporation) owns more than the following total number of units in the project:
projects with 2 to 4 units – 1 unit

projects with 5 to 20 units – 2 units

projects with 21 or more units – 10%”

Jason Anker  :  “yea, no more than 1 per person under 10 units”

Clayton Sandy  :  “% of one owner can kill it, but Fannie accounts for smaller projects”

Jason Anker  :  “non-owner occ % doesn’t matter if OOC and greater than 10% 1 entity matters for all review types”

Clayton Sandy  :  “Edie, 50% investor doesn’t matter on owner occupied deals. Also find out how many units are in the project. If there’s only a few and one person owning one equates to more than 10% means they can own more than 10%”

Edie Clark  :  “More than 50% Investor Properties and one owner owns more than 10% of the Units”

Clayton Sandy  :  “probably not, but what makes it non-warrantable?”

Edie Clark  :  “Borrower approved for 5% Down Conventional Loan. Realtor wrote an offer on a non-warrantable Condo without checking with me. Is there a Lender offering 5% Down Non-Warrantable Condo loans? I said I would check:-) Thank you!!”

Original Source