Austin Mortgage Blog

Posts Tagged ‘indirect bidders’

Austin mortgage borrowers are advised to stay a little on the defensive side until we get further confirmation that the market is headed back to those July highs

7yr auction results -  Issue stopped 2bps behind the auction deadline quote at a 2.394% yield, bid to cover of 2.78 as compared to an average cover of 2.86.  Indirects took just 42.3% of the issue vs 51% last month.  Overall the auction was given about a C+ grade.  So much for expectations.

Stocks have gained a little ground, now only down 40.  Mtg backs dipped off the auction results but now are back up 5s.  10yr is up a tick trading 2.99%

Austin mortgage borrowers are advised to stay a little on the defensive side until we get further confirmation that the market is headed back to those July highs.

Have a great afternoon!

Time to get a little more defensive on the market

21 billion of 10 year notes just crossed the block to yield 3.119% with 42% going to indirect bidders (not bad as the average is 37%).  Trouble is, the issue came with a lions tail of 1.65 bps and a weak bid to cover of 3.09 to 1 (average is 3.17).  We would give this one a C as street dealers (Wall Street) took down a good chuck of this and will need to redistribute the paper.  Auctions results have put a little more pressure on the market with the 10 year now off 20/32’s.  Mortgage backs are down 9/32’s.  Technically, today’s trade has pushed below the 38% fibo retracement level, creating a new sell signal on 14 day slow stochastics.  MACD and RSI have joined the bears party as well.  Although volume remains light, bond bulls seem to be losing their swagger.  Time to get a little more defensive on the market.

Austin mortgage rates remaining low well into the third quarter

Big week ahead as stocks kick off  2^nd quarter earnings and the economic news calendar heats up.  On the stock front, the key to earnings will not be earnings at all, as they are expected to be good to very good.  What traders will be looking for is guidance going forward.  In other words, how do CEO’s feel about the business climate going into the second half of the year?

Alcoa kicks it off with their release due out after the closing bell.  Bonds, notes, and mortgage produce seem to be in a reactive mode, trapped between financial crisis, economic challenges ahead, government regulation, and regulative groups that will take on a life of their own.  Fed Chief Bernanke was on the biscuits and gravy circuit this morning, talking about small business having access to credit being “crucial” given that this sector employs one half of all Americans and accounts for 60% of gross job creation.

35 billion of 3 year notes just crossed the block at 1.055% with 41% going to indirect bidders (low side). The bid to cover was 3.20%, beating the average of 3.05%.  21 billion of 10 year notes will come tomorrow and then 13 billion of 30 year bonds on Wednesday.  Should not be a problem to get rid of the paper.  Technically, the market tested the 38% retracement level last Thursday and bounced, suggesting that the move was corrective in nature.  Daily studies however, are not positioned to endorse a new rally, instead projecting a “trendless” period of time.  What this tells us is that we will continue to trade the small range that has been with us for a couple weeks now, swinging from high to low, low to high depending on stocks and ‘headlines”.

Nothing huge here as we see Austin mortgage rates remaining low well into the third quarter.

Borrowers looking to lock an Austin mortgage rate should stay defensive short term

The first leg of the Treasury’s Refunding auction just hit.  38 billion of 3 year notes crossed the tape at 1.414% (no tail), 3.27 to 1 bid to cover (average is 3.0 to 1), Indirect bidders took 51% (not bad) and Direct bidders took 16.5% (double the average).  Not bad overall, we’ll give it a B.  The trade today have been a little squirrely as stocks opened in the hole (rethinking the trillion dollar EU bailout) but have now gone positive as the big board prints plus 52 points.  Naz is up over 20 points as well.  Bonds, notes, and mortgage backs opened in positive territory.  Currently, we’re unchanged as stocks have gone green.  Not a bad performance for mortgage product as the spreads have tightened to the 10 year note which is off 9/32’s to yield 5.78%.  Market is starting to pick up on the volatility front so be careful out there.  With more supply coming tomorrow and Thursday, coupled with a stock market that may have found it’s sea legs, borrowers looking to lock an Austin mortgage rate should stay defensive short term.  More in a few.

The market will need to close above this level (below in yield) or at least stay near that level to confirm a near bull trend is in the making

44 billion of 2 year notes hit the screen to yield 1.024% with 31% going to Indirect bidders.  The “street” took 21.4% while the issue grew a 1.4 bps tail.  Bid to cover was 3.03 to 1 versus an average of 3.19 to 1.  Weak indirect bidding, good sized tail, and below average bid to cover make this somewhat of a dog.  Give it a C, best case.  Post auction, treasuries and mortgage pricing have taken a dip.  Stocks coming back from the abyss has not helped our case either.  Technically, the rally today has formed a high volume area at 117 21 (yield of 3.68%).  The market will need to close above this level (below in yield) or at least stay near that level to confirm a near bull trend is in the making.  Given that so may outside influences have played a factor today, we view the move as somewhat suspicious.  Not saying that we’re going to reverse in any huge way.  Just cautious about any further advances (rally).  Keep that in mind as the day progresses.  If you have a minute, catch some of the Goldman executive grilling.  Great theater.

For the time being, I’d say we are in a “Goldie Locks” market, not to hot, not to cold, but just right

13 billion of these puppies crossed the block to yield 4.77% with 36.8% going to Indirect bidders.  Direct bidders took 25.5% as well.  The bid to cover was 2.73 to 1, respectably against the average of 2.50 to 1.  The only drawback was that the issue produced a 1 basis point tail, something on the order of a bulldog or a pug.  Not bad overall, give it a grade of B.  Market reaction was a quick rally back to the day’s best levels, only to reverse in short order to where we repriced.  Currently, the 10 year note is down 3/32’s (yield 3.88%), mortgage backs are unchanged, and stocks have gone positive on both the Dow and the Naz.  Good news is that the selling of late is moderating.  Not so good news is that we do not see a catalyst to rally the market.  For the time being, I’d say we are in a “Goldie Locks” market, not to hot, not to cold, but just right.  Best to keep both hands on the wheel.

This is where the battle of bulls and bears will take place and the weapon of choice seems to be the 30 year bond auction outcome

Just a quick update as early morning gains are starting to fade.  At one time we had mortgage backs plus 5/32’s on the heels of a jump in Weekly Unemployment Claims (plus 18K to 460K).  Stocks were also supportive as both the big board and the Naz opened in the red.  Stocks have cut their losses in half and now the focus has turned to today’s 30 year bond auction.  With the when issued pre-auction price trading right at 4.75%, valuation seems reasonable but worries about Indirect bidders is front and center.  The average for this auction has been 40% taken by the Indirect types.  Last month’s auction however was a disaster with only 23.9%.  Technically, we’re right up against the down trend line.  This is where the battle of bulls and bears will take place and the weapon of choice seems to be the 30 year bond auction outcome (12:00 cst).  Just a heads up as traders are getting a touch nervous.

Austin Mortgage Update – 7-Year Note Auction

32 billion of the odd ball Treasury just hit the tape to yield 3.374% with 41.9% taken by Indirect Bidders.  Stateside account took only 8.1% with the bid to cover 2.61 to 1.  The issue created a .4 bps tail, just like the 5 year.  The “Street” have given this one a grade of D.  Post auction, selling tanked the market for another ½ point in the 30 year bond.  With mortgage backs off a smooth 17/32’s, there is no place to hide.  Buckle up and stay defensive until the shootin’ stops!

5 year notes hit the block at 2.605% with 39.7% going to Indirect Bidders

5 year notes hit the block at 2.605% with 39.7% going to Indirect Bidders.  Bid to cover was 2.55 to 1 and the issue had a T-Rex type tail of 4 bps.  To say the least, the bond market did not like it.  Mortgage backs off a minimum of 20/32’s and the 10 year is off 40/32’s.

Best to take advantage of current mortgage pricing with such low odds of improvement in the cards

Market action today has been like watching paint dry.  Up a tick, down a tick, just not much volatility.  Earlier today, Weekly Unemployment Claims fell 6K to 462K.  Continuing Claims went the other way, up 37K to 4.558 million.  Both prints were close to economists’ expectations.  At high noon, the Treasury auctioned 13 billion of 30 year bonds.  The issue flew off the shelves at a yield of 4.679% with 23.6% going to Indirect Bidders and 29.6% taken by Direct Bidders.  The direct bid was huge, showing tremendous interest by domestic investors.  Bid to cover came in at 2.89% compared to an average of 2.51% (very good) but the best part was that the auction was taken at a yield that was under the yield trading at deadline (4.71%).  Traders call this “bidding through the screen” or a “bullet auction”.  Overall, give it an A.

Even with the great auction, nothing happened with pricing on 2 year through 10 year notes.  The 30 year bond has all the action, going from down 2/32’s to up 14/32’s in a nanno second (flatter yield curve).  Currently, both the 10 year note and mortgage backed securities are off 1/32^nd.   Technically, strong auctions this week have not rallied the market but have kept prices above major support, the 40 day moving average, and above the daily trend line.

The problems for bond bulls is that almost all daily oscillators show little upside potential (not much chance of a rally).  Mortgage backs do however have added support with traders and FNMA/FHLMC continuing to buy back positions.  Looks like a tug of war that no one wins.  Best to take advantage of current mortgage pricing with such low odds of improvement in the cards.  Currently, we’re trading 3.73% with the extremes at 4.62% and 2.0%.  Lots of room to run (either way) as the economic picture changes.