YO-YO Market

Mortgage bond prices closed slightly below the levels where daily pricing was set applying upward pressure to mortgage rates. Trade was volatile all day tied to the movement in stocks. Equity and bond prices were yo-yoing with each snippet of news out of Europe.  Tomorrow brings weekly jobless claims and Q3 advanced GDP before lenders set pricing. Prepare yourself and your borrowers for a wild ride. Regardless of what happens in Europe stocks and bonds will most likely be EXTREMELY volatile.

GADHAFI DEAD?

The head of the National Transitional Council military arm announced on Al Jazeera Arabic that Gadhafi is dead. The report hasn’t been confirmed.

Mortgage bonds are weaker at the open pushing rates higher as news out of Europe indicates the euro zone’s bailout facility will be able to buy EU bonds on the secondary market. The US debt market was weaker heading into the jobs data and didn’t move move following it.

Stock futures are higher adding addition pressure to mortgage bonds. The flight to quality buying of US debt instruments continues to fluxuate as hopes of a European debt solution increase. AS WE CONTINUE TO STATE….the trouble in Europe is far from over and we have been on this roller coaster for some time so expected more volatility to come!!!

Weekly jobless claims @ 403k, expected @ 400k, relatively in line with expectations

Mortgage bond prices stabilize and trade sideways

Mortgage bond prices stabilize and trade sideways but with debt resolution still up the air, the volatility will remain and prices will trade sideways.

MARKET WRAP: Bond markets stabilized today and pushed higher despite better than expected news from initial claims, pending home sales and not-so-good results from the $29B 7-yr note auction. Whispers of a lower than expected 1st read on Q2 GDP could have helped to lend support to Bonds. Stocks traded higher for the most of the session but fell in the last hour of trading ahead of this evenings House vote on the debt ceiling due around 5:45pm ET. The 4% coupon jumped 47bp to end the session at 100.75. The Dow fell 62.44 to 12,240.11, the S&P 500 Index lost 4.22 to 1,300.67 while the Nasdaq was near unchanged at 2,766.25. Oil was slightly lower in after hours trading at $97.19/barrel. Along with GDP, Chicago PMI, Employment Cost Index and Consumer Sentiment will be released tomorrow.

Weak Existing Home Sales and AT&T Buys T-Mobile

MARKET WRAP: The announcement from the Treasury that it will begin selling $10B in Mortgage Backed Securities each month starting this month sent MBS prices lower today. The total amount the Treasury owns is $142B. The news sent MBS and Treasuries considerably lower but they did manage to pare some of those losses by the close of trading. The 4% coupon fell 34bp to end the session at 98.97, despite a weak read on Existing Home sales. A big M&A deal and a somewhat stabilization of Japan’s nuclear reactor problems helped to boost Stock prices today and as money came out of the Bond markets. AT&T announced it will purchase T-Mobile in a deal worth $39B. The Dow surged 178.01 to 12,036.53, the Nasdaq rose 48.42 to 2,692.09 while the S&P 500 gained 19.18 to 1,298. Oil prices rose as the US and western allies launched an air attack on Libya in an effort to oust Gadhafi settling at $102.33/barrel up $1.26. There are no major economic reports due for release tomorrow.

Japan and the Mid East Impact Bonds.

Mortgage Bonds moved higher today on the devastating news out of Japan and as the unrest in the Mid East continues but they closed well off the best levels of the session halted by resistance and as Stocks were able to pair 2/3s of the days losses. The 4% coupon finished at 98.66 up 22bp. There were no economic reports today. As mentioned, Stocks were able t pare some losses as investors bought on the dips. The Dow fell 51.24 to 11,993.16, the S&P lost 7.89 to 1,296.39 while the Nasdaq dropped 14.64 to 2,700.97. Oil traded below the $100 mark today but was able to reverse course and move higher as news that the rebels in Libya were being defeated settling at $101.19/barrel near unchanged after trading as low as $98.47. The Fed will have a 1-day FOMC meeting tomorrow with the statement being delivered at 2:15pm ET. The only major economic report will be the NY State Empire Manufacturing Index.