Today’s gains are primarily a factor of the bond market’s response to yesterday’s Cohen headlines (plea deal regarding campaign finance violations). Bonds aren’t too flustered about the headlines, but a few traders sought safe havens due to the increased odds that the president will eventually be implicated by the underlying investigation.
10yr yields were pushing their best levels in months just before the 9:30am NYSE open. After that, stocks took charge, telling bonds not to worry about those political headlines and to calmly back away from a range breakout. Bonds complied, but reserved the right to react to the afternoon’s FOMC Minutes.
The Minutes were almost completely uneventful, with most of the bullet points well-assumed by financial markets. If there was any detectable leaning, it was slightly positive for bonds, but not unequivocally so. As such, bonds solidified their modest gains with a sideways slide into the close. Yields were still above 2.82% by the 3pm CME close, but flirted with lower levels afterward. That’s neither here nor there as we’d need to see a bigger, more sustained break to consider the 2.82% floor officially broken.
MBS Pricing Snapshot
Pricing shown below is delayed, please note the timestamp at the bottom. Real time pricing is available via MBS Live.
101-31 : +0-04
2.8189 : -0.0251
|Pricing as of 8/22/18 4:05PMEST|
Today’s Reprice Alerts and Updates
2:17PM : Fed Minutes No Big Deal; Bonds Steady to Slightly Stronger
10:49AM : Bonds Pull Back at NYSE Open (again)
MBS Live Chat Highlights
Matthew Graham : “same old impact”
Matthew Graham : “I think their stance on trade was fairly well assumed and communicated via individual speeches”
Sung Kim : “do their comments make any trade news any more important or same old impact?”
Matthew Graham : “FED CHAIRMAN JEROME POWELL SUGGESTED U.S. CENTRAL BANK WOULD LIKELY RESUME DISCUSSION OF OPERATING FRAMEWORKS FOR MONETARY POLICY IN THE FALL -MINUTES”
Matthew Graham : “ALL PARTICIPANTS POINTED TO ONGOING TRADE DISAGREEMENTS AND PROPOSED TRADE MEASURES AS IMPORTANT SOURCE OF UNCERTAINTY AND RISKS -MINUTES”
Matthew Graham : “MOST PARTICIPANTS SAID ESCALATION OF TRADE DISPUTES WAS A POTENTIALLY CONSEQUENTIAL DOWNSIDE RISK FOR U.S. ECONOMY -MINUTES”
Matthew Graham : “MANY PARTICIPANTS NOTED WOULD LIKELY BE APPROPRIATE IN “NOT-TOO-DISTANT FUTURE” TO NO LONGER REFER TO MONETARY POLICY STANCE AS ACCOMMODATIVE -MINUTES”
Matthew Graham : “PARTICIPANTS SAID THEY GENERALLY EXPECTED THAT U.S. GDP GROWTH WOULD SLOW IN SECOND HALF OF 2018 BUT REMAIN ABOVE POTENTIAL -MINUTES”
Matthew Graham : “PARTICIPANTS GENERALLY NOTED THERE WAS CONSIDERABLE MOMENTUM IN HOUSEHOLD AND BUSINESS SPENDING -MINUTES”
Matthew Graham : “MANY PARTICIPANTS SAID IT WOULD LIKELY “SOON” BE APPROPRIATE TO RAISE INTEREST RATES; PARTICIPANTS GENERALLY EXPECTED FURTHER GRADUAL HIKES -MINUTES OF JULY 31-AUG. 1 FEDERAL RESERVE POLICY MEETING”
Ryan Kelly : “I know several lenders that advertised that way until they got fined. Then they would change the advertising verbiage for a while and pay the fines. Then they would just go back to doing it again until they got fined again. They stated they made more money advertising that way, so they would just pay the fines. Pretty unethical, but they did it. There are obviously a few still doing it.”
Matthew Graham : “those who choose not to play those games end up at a disadvantage when competing for impressionable clients. How to fix?”
Matthew Graham : “exactly TB, it’s still out of pocket. No matter how you say it, I think it conveys something other than what the average consumer assumes it means.”
Joel Marks : “”we’ll pay all your closing costs” is the most accurate, though, of course, they’ll do it by giving you a higher rate.”
Timothy Baron : “Although, it’s a little more out of pocket every month.”
Matthew Graham : “how about “no out of pocket?””
Joel Marks : “On a related note, I remember in some training that it is illegal to advertise “no closing cost” loans because, technically, all loans have closing costs even if there is a credit to offset them. Yet I hear ads every day making this claim.”