Archive for February, 2014

MBS

Tuesday, February 18th, 2014

Mortgages are opening in line with Treasuries after four consecutive days of widening last week. One dealer notes that heavy origination selling and real money selling overwhelmed Federal Reserve purchases. Some of the heavy origination selling,the same dealer opined, might have been a consequence of the holiday yesterday which would ...

Science and Risk Aversion

Monday, February 17th, 2014

The FT has posted an article on stress and the reduction of a human hormone which turns traders risk averse in times of financial stress. It is an interesting read. It reminds me of a Barron's article many years ago in which a trader (I think his name was Paul ...

Larry Summers Channels Lord Grantham

Monday, February 17th, 2014

Via FT:   America risks becoming a Downton Abbey economy By Lawrence Summers Inequality must be addressed, with free markets playing a pivotal role Inequality has emerged as a major issue in the US and beyond. A generation ago it could reasonably have been asserted that the overall growth rate of the economy was the main influence ...

Brown Brothers on China and EM

Monday, February 17th, 2014

Via Mark Chandler at Brown Brothers (an excerpt): 1. China: Over the weekend, China reported a large than expected rise in yuan loans and aggregate financing. Yuan loans rose to CNY1.32 trillion, a 23% increase year-over-year. The consensus was for a CNY1.1 trillion increase after CNY482.5 bln in December. Aggregate financing rose ...

Brazil Notes

Thursday, February 13th, 2014

At one point early today the Bovespa was down about 1000 points, 2 percent but it closed down about 400 points. The government said that it might spend some reserves to stabilize the currency and that probably sparked the turnaround. Early in the day the currency traded close to 2.44 ...

Thirty Year Bond Result

Thursday, February 13th, 2014

Via CRT Capital *** The auction was well-received a 0.9 bp stop-through (first for a new issue since May) and non-dealer bidding at 59.2% vs. 54% norm *** * 30-year auction stops at 3.690% vs. a 3.699% 1-pm bid WI. * Dealers were awarded 40.8% vs. 46% average of last four 30-year Refundings. * ...

RBS on Retail Sales and GDP

Thursday, February 13th, 2014

RBS Securities comments on the weak retail sales report and attendant revisions to Q4 and Q1 GDP. RBS lowers Q4 from 3.2 to 2.3 and has a 1.5 print in Q1. That low of a print in Q1 would spark cries of "taper the taper". Via RBS Securities: Retail sales were soft, ...

MBS

Thursday, February 13th, 2014

Mortgages are a + to 1+ wider versus Treasuries this morning . Activity is light. One dealer in a note suggested that mortgages are cheap enough to buy versus Treasuries and he expected them to begin grinding tighter. He did offer the caveat that he would withdraw the recommendation if ...

Bond Auction Today

Thursday, February 13th, 2014

The Treasury will auction $16 billion Long Bonds today to complete the refunding process. There are quite a few factors at work today and included in that dynamic is the weather on the East Coast today. I think that many of those who bid will head for the exits shortly ...

Euro Currency Commentary

Thursday, February 13th, 2014

Via Mark Chandler at Brown Brothers: It is really the euro's gains that are the least obvious.  Yesterday's pullback was sparked by the ECB's Coeure using the strongest words to date to play up the possibility of a negative deposit rate, saying that the ECB was "seriously thinking" about it.  The ...