Rollover - 22 basis points after yesterday's Close

November 10th, 2016

Chuck Berry said Rollover Beethoven.  When the mortgage backed securities have a rollover this has no effect on rates, but it does make the chart look a little different. Mortgage Bonds had their monthly coupon rollover after the close of trading yesterday, meaning this month's coupon is closed out and all new loans are placed into next month's coupon. While the effect of this rollover was -22bp for the Fannie Mae 30-year 3% coupon, rate sheets or pricing will not be impacted..

Commentary:

With big losses incurred over the past few days the 3% Fannie Mae 30 yr Coupon has lost over 300 basis points since the end of September. Hopefully we will see some movement in the other direction as the market settles down in the post Trump election era. The only thing that we will not expect is boredom.  Below is how the market ended the day

VOLATILITY remained in the MBS markets today as they opened lower, traded to near unchanged levels, only to decline by day's end. The 3% Fannie Mae 30-yr coupon closed at 101.09, -50bp and is down over 300bp since the September 22 high of 104.22. Stocks had a rather mixed session with the Dow up big, the S&P modestly higher, while the Nasdaq closed lower. Tech Stocks fell, while banks and industrials rose as investors rearranged bets to benefit from a Donald Trump presidency. The Dow gained 218.19 points to end at an all-time closing high of 18,807.88, the S&P 500 closed at 2,167.48, +4.22 points, while the tech heavy Nasdaq closed down 42.27 points to end at 5,208.79. WTI oil closed at $44.66/barrel, -$0.61. 10-yr T Note yield 2.14%. The Bond markets are closed tomorrow in observance of Veterans Day.

 

 

What Is Going On With Interest Rates?  #wigowir

Below is the news when it happened and the market’s reaction.  For a full view of the day start at the bottom and work your way up. If want to know what just happened start at the top. All Times are Eastern Standard Time.  When the price of Mortgage Backed Securities (MBS) goes down rates go up, and when the price goes up rates come down. Remember in the bond market Bad News is Good News and Good News is Bad news. On the chart below posted at the close of busines you will notice some additional items that need to be explained, they are as follows:
 

R2 (Second level of resistence) $102.07  

R1 (First level of resistence) $101.59

S1 (First level of Support) $101.16  this is the low of 3/16/16

S2 (Second level of Support) $100.84 this is the low of 12/01/15

The above are numbers that trader look at during the day.  Support can be consider a buying opportunity and Resistence can be considered a selling opportunity.  Stay tuned and see how these numbers hold up.  

 
 
 
Thu, Nov 10 2:25 PM
Reminder: The Bond markets are closed tomorrow in observance of Veterans Day. Our next Daily Market Update will be delivered on Monday. The Stock markets will observe a regular session tomorrow.
Thu, Nov 10 1:51 PM
The Dow surges higher by 270 points as the post-election rally continues.
Thu, Nov 10 1:12 PM
The $15B 30-year Bond auction draws a "D" rating and ends this week's offerings.
Thu, Nov 10 12:57 PM
At midday, MBS lower, though off worst levels. Dow and S&P higher. 10-yr yield 2.09%.

11:44 AM The S&P 500 is near unchanged, but the Dow is up 150 points.

11:12 AM Freddie Mac reports that the 30-yr fixed conventional mortgage rate, $417K or less, rose to 3.57% with 0.5 in points and fees.

 

10:39 AM The 3% Fannie Mae 30-yr coupon has bounced off support at 101.16 and has surged higher. With stabilization seen, we can now recommend floating. The S&P has turned negative.

10:11 AM Note: The Bond markets are closed tomorrow in observance of Veterans Day.

 

 

10:29 AM The chart above was posted.  If you are wonder why rates went up so fast, you can see on this chart. 

9:43 AM The Treasury will sell $15B 30-yr Bonds today, results at 1:00 p.m. ET.

9:41 AM Dow +160 points.

9:40 AM Dow trading at an all-time high of 18,737.

9:35 AM Fed Fund Futures show a 70% chance of a rate hike next month.

9:01 AM The Dow is poised to open at an all-time high.

8:49 AM The New York Fed is supportive this morning buying up to $2.25B in Fannie/Freddie 30-yr 3s and 3.5s beginning at 9:00 a.m. ET.

8:32 AM WTI oil $44.78/barrel, -$0.47.

8:30 AM Weekly Initial Jobless Claims down 11K from last week to 254K and below the 262K expected.

8:26 AM The 10-yr T Note yield rises to 2.10%.

8:26 AM U.S dollar index 98.89, +0.36.

8:24 AM S&P futures higher as investors view a Trump win as more business-friendly with tax cuts, deregulation of banks and higher defense and infrastructure spending.

8:22 AM Mortgage Bonds had their monthly coupon rollover after the close of trading yesterday, meaning this month's coupon is closed out and all new loans are placed into next month's coupon. While the effect of this rollover was -22bp for the Fannie Mae 30-year 3% coupon, rate sheets or pricing will not be impacted.

 

8:22 AM MBS continue to move lower as the effects of the Trump win.

 

Johnmarbury.com has attempted to verify the information contained on this post.  However any aspect of such may change without notice.  Johnmarbury.com does not provide investment advice and does not represent that any of the information or related analysis is accurate or complete at any time.

 

 

Contact

John Marbury
jmarbury@nationalbankofcommerce.com
NMLS# 740833
Phone:205-266-5669
Fax: 866-217-4174

813 Shades Creek Parkway
Birmingham, Alabama 35209
 

Mission Statement

As a loan officer (mortgage broker 1989-2006) since 1985, I have seen a lot of changes over the years. The only consistency in the mortgage business and life is change. This is the reason that we believe it is necessary to move quickly and to be early. Let us know if you have any questions or if we can help in any way.

Sign Up Now!