Mortgages MAX

Posted To: MBS Commentary
4.5's up 8 ticks at 100-25 (after being as high as 100-28) 10yr yield down approx. 6bps at 3.67 S&P Down "lots" at 1194.71. Got a bounce on it's 1190(ish) support. Uncanny Adherence to Treasury Trend Channel. Technicals thanks to Fundamentals? MBS prices are a few ticks higher than some of the lower levels seen in march and January before major sell-offs. Treasuries are within a bp or two of their actual level the day before the big March sell-off. As you'll see in the longer term chart, it was a steep shot up to those high yields, but an EXTREMELY technical and measured return. Almost like the high and low sides of the trend channel agreeing to work in a reluctant pair to move in the same direction with some sort of blind hesitance. Almost like a calculated "testing…(read more)
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Original post by Matthew Graham

Posted To: The Garrett Watts Report
I don’t have an opinion about the charges levied against Goldman by the SEC, but some of the bantering between the seven Goldman employees (past employees) and the Senate Subcommittee caught my eye. Let’s do a short review of what I believe the traders were thinking in 2006 and 2007 and what they did to address increasing risk to the firm. They were essentially hedging the firm against financial losses as a result of a growing concern over the performance of subprime loans and counter party risk of mortgage bankers. Maybe this is no different than a mortgage banker hedging against interest rate risk, especially if one believes rates are rising. But first, let me tell a quick story before we discuss Goldman in greater detail. I did an audit on a large subprime wholesaler in late…(read more)
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Original post by C.M. "Corky" Watts, CMB