New Year Starts Off Volatile
2012 is off to a volatile start, with very little origination out of mortgage lenders and the usual Fed buying. MBS is over 10bps tighter to Treasury bonds and we saw the effect of that this morning as front-month Fannie 3.5s were trading just above 103.
As origination comes back in from the holidays, we expect mortgages to snap back as lenders pick their spots to be sellers and fast money sellers take profits. We’re starting to see a little of that right now, as Fannie 3.5s have retreated to 102-22, down 10 tics from the AM highs.
In case you missed yesterday’s FHFA announcement regarding guarantee fee changes, click here for a review. Their goal is to raise g-fees across the board by about 10bps, equivalent to about 40pbs in price. FHFA wants this done by April 1, 2012. We’ll post more details as they become available.