Austin Mortgage Blog » indirect bidders

Signs of strong demand for 7 year notes

Max Leaman Austin Mortgage — Thu, 28 Oct 2010 23:56:10 +0000

29 billion of 7 year notes just hit the tape to yield 1.970%. Demand was very good as 50% of the issue was taken by Indirect Bidders. Bid to cover ratios came in at 3.06 to 1. Both of those measures were above average. The issue was also “bid through the screen”, meaning that some got shut out even if they had at the money bids in. That is a sign of strong demand. All treasury maturities have reacted in bullish fashion. Currently, the 10 year note is up 16/32’s. Mortgage backs have followed suit.

Sellers are in control of the market with additional downside (higher yield/worsening Austin mortgage pricing ) a high probability

Max Leaman Austin Mortgage — Wed, 27 Oct 2010 21:15:30 +0000

5 year notes crossed the auction block to yield 1.33% with 39.5% taken by Indirect bidders. The “street” took a mere 11% as the auction posted a 2.82% to 1 bid to cover. Post auction, price action on treasuries and mortgage backs has been soft with current coupon MBS now off 10/32’s.

Technically, market profile structure is bearish following Monday/ Tuesday price action. Sellers are in control of the market with additional downside (higher yield/worsening Austin mortgage pricing ) a high probability.

Best bet for Austin mortgage borrowers is to be defensive in this market!

Overall, this 30 year bond auction was not a dog but a pack of them

Max Leaman Austin Mortgage — Thu, 14 Oct 2010 18:23:47 +0000

13 billion of 30 year bonds just hit the tape. Yield 3.852% with a whopping 3.2 bps tail. Indirect Bidders and Direct Bidders took 41% of the auction, leaving the street to mop up nearly 60%. Bid to cover stunk at 2.47 to 1. Overall, this was not a dog but a pack of them. Give it a D just because we hate to fail anybody. Bonds, notes, and mortgage backs are trading fast market conditions with the 10 year off ½ point and the bond down over 1 point. MBS now off 5 to 7/32’s. Continue reading →

We’ll give the 10 year note auction a B, not to hot, not to cold, but just right considering yesterday’s disaster

Max Leaman Austin Mortgage — Wed, 13 Oct 2010 21:03:14 +0000

21 billion of 10 year notes hit the tape with a .5 bps tail. 41.5% of the reopened issue went to Indirect bidders while Direct bidders took 11%. The “street” took the remaining position of approximately 47.5%. Bid to cover was a respectable 2.99 to 1. We’ll give the auction a B, not to hot, not to cold, but just right considering yesterday’s disaster and the tough hedging environment that fixed income investors are in today.

Reaction, post auction has seen the 10 year note slip a few ticks, now off 18/32’s. Mortgage backs are off 4/32’s, 1/32^nd worse than the pre-auction release. Not much has changed with our bias which remains tactically neutral/bearish short term. With another 13 billion of 30 year paper on the block tomorrow, choppy trading and volatile conditions will persist.

Auction Update: 7-yr note auction draws 1.890%

Max Leaman Austin Mortgage — Wed, 29 Sep 2010 17:17:15 +0000

Auction Update: 7-yr note auction draws 1.890%. Sees a 3.04 bid to cover (10-auction average of 2.84) and indirect bidders taking down 50.2%. Best bid to cover since 7-yr was brought back in Q1 2009. Pretty solid auction -Treasuries and mortgages are regaining some of the ground lost during the morning trading. Continue reading →

Austin mortgage borrowers are advised to lock their Austin mortgage rates and get out of the way as the risk reward is not in your favor

Max Leaman Austin Mortgage — Wed, 25 Aug 2010 19:48:36 +0000

Results of today’s 36 billion 5 year note auction just hit the tape to yield 1.374%. The issue had good sponsorship by Indirect Bidders (51%) but the “street” stayed away, taking only 8.7%. The auction did produce a better than average bid to cover but grew a 6 bps tail ( equivalent to a cocker spaniel). Overall, we’ll give it a B.

One thing that is of concern is that the auction was not a blow out, instead something close to average. Given the disastrous Durable Goods and Housing data this morning, many expected a buying frenzy for the issue. Matter of fact, the 10 year note has now given up all of today’s gains, currently unchanged on the day. Mortgage backs, which had brief spikes to plus 10/32’s, are now up 5/32’s. Caution is advised due to a possible worsening price change.

I think what you’re seeing here is a market that has priced in something just short of the abyss. That said, the gains on bad news are short lived and/or not nearly as potent as they have been. This is a sign that the market is topping out. Not advocating a new trend change to higher Austin mortgage rates, just a hold-steady type of market. When this kind of environment is at hand, Austin mortgage borrowers are advised to lock their Austin mortgage rates and get out of the way as the risk reward is not in your favor. More in a few.

Price action post auction has not done anything to help Austin mortgage pricing

Max Leaman Austin Mortgage — Thu, 12 Aug 2010 23:35:01 +0000

16 billion of 30 year bonds hit the tape to yield 3.954% with a bid to cover of 2.77 to 1 (average is 2.72 to 1). The issue had a tail of 1 bp, similar to a schnauzer. Indirect bidders took 46% (not bad) while direct bidders (Wall Street) took 18% (not too hot). Overall, it’s a pretty good auction. We’ll give it a B-.

Price action post auction has not done anything to help Austin mortgage pricing. Sell side orders are still on the heavy side with MBS still off 15/32’s. As I mentioned earlier, we don’t see this as a major trend change or a sentiment shift towards the bears. Just a more realistic, balanced value trade in the coming days that has priced in all the bad news it can. Careful out there.

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

Max Leaman Austin Mortgage — Thu, 29 Jul 2010 17:28:13 +0000

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

Max Leaman Austin Mortgage — Wed, 14 Jul 2010 02:23:01 +0000

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

Max Leaman Austin Mortgage — Mon, 12 Jul 2010 20:02:50 +0000

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.