Originators Short Despite Lock Spikes
Mortgages are under more pressure than CC Sabathia’s belt buckle. After snapping more than 20bps tighter to U.S. Treasuries following the Fed announcement, we’re beginning to see trade unwind as mortgages are under-performing by 12bps this morning.
So far, Fannie 3.5’s have given back about a half point in price. Surprisingly, it’s not coming from originators, who all had monster-lock days yesterday. Rather, hedge funds and money managers are taking profits on tighteners that they put on after the Fed announcement.
Most originators have found themselves short this morning, despite the spike in locks yesterday, as they have modeled-in higher fallout expectations on their existing pipelines.
Stocks around the world continue to slide, with the DOW down at around 95 points.