Market Update, Thursday, May 21, 2020
Mortgage supply continues to be robust. Several broker dealers saw origination topping over $5B. The Federal Reserve had a large buying operation in both current coupon UMBS and G2SF. Today they will continue their buying operations in UMBS-30yr and UMBS-15yr.
Market Update, Wednesday, May 20, 2020
Originations continue to be strong as dealers are reporting north of $5B in originations. The Federal reserve continues to support the mortgage market with QE4 purchases. Mortgages were well supported in 2.0-3.0s, where the fed is conducting their operations.
Market Update, Tuesday, May 19, 2020
Originations were strong as dealers were reporting north of $3B in supply. The Federal Reserve bought $2.97B in UMBS 2.0-3.0s and an additional $1.575B in GNMA 2.5-3.5s. They will be conducting another operation tomorrow at 10am for UMBS-15yr followed by an 11:30 operation in UMBS 2.0s-3.0s.
Market Update, Monday, May 18, 2020
Mortgage supply remains robust with the record low rates. A few dealers were reporting more than $4B in total originations. Liquidity finally appeared in the FNCL 2.0 coupon this past week with about 35% of supply being sold in that coupon. Large originators tend to play in that space at a larger percentage than smaller originators. They have the loans to fill the trades in the event liquidity diminishes.
Market Update, Thursday, May 14, 2020
The Fed has two operations where they will focus their allocated $4.875B of MBS purchases on UMBS 15yr 2.0%-2.5%s followed by UMBS 30yr 2.0%-3.0%s. U.S. treasury yields were lower across the curve, led by the longer dated notes as Chairman Powell distinguished that negative rates were currently not under consideration.
Market Update, Wednesday, May 13, 2020
Daily originations were reported in the $6.0B-$9.0B range. The Fed utilized their gunpowder and purchased the maximum allocation ($5B) of MBS across two operations. This week marks the first time the Fed has bought UM30 2.0%s and similar to Monday, the Fed purchased $240M worth of UM30 2.0%s on Tuesday. Continued Fed sponsorship in the lower portion of the production coupon stack should drive primary rates lower going forward.
Market Update, Tuesday, May 12, 2020
Daily originations continue to be elevated, with reported volumes ranging from $8.0B to $9.5B. The Fed purchased their maximum allocation of $5B in MBS across two operations bringing its QE4 purchase total to a staggering $628B.
Market Update, Monday, May 11, 2020
The Fed buying schedule saw a reduction in the maximum MBS purchases to $5B a day where they will be focusing purchases in 2.0%-3.0% coupons in 30yr conventionals going forward. Origination supply was on the lighter side to end the week, reported at ~$8B versus Thursday’s ~$8.5-$10B.
Market Update,Friday, May 8, 2020
The Fed purchase schedule today includes a maximum of $2.2B GNII and then later a maximum of $3.960B FN30 year securities.
Treasuries rallied heavily driven by investor concern that the U.S. central bank will cut rates into negative territory. At the close, the 2-year was +2+/32nds (.141) and the 10-year was +20+/32nds (.644).
Market Update,Thursday, May 7, 2020
The Fed purchase schedule today includes a maximum of $1.8B FN15 year and then later a maximum of $3.960B FN30 year securities.
Treasuries were mixed with the yield on the 10-year rising following the treasury refunding announcement of a record $96bln. At the close, the 2-year was +0.625/32nds (.180) and the 10-year was -13.5/32nds (.705).