MBS Lower and Wider. Reprices Reported. Buyers Lurking
By · CommentsPosted To: MBS Commentary
Rate sheet influential mortgage-backs are experiencing some localized weakness as stocks rally and swaps spreads widen. Nominally, yield spreads have been wider all morning but price levels were still pushing new records because Treasuries were catching a bid, but the poo hit the fan a few minutes ago and prices plummeted. We're still in the green though...just off the session highs. The September FNCL 4.0 is +0-03 at 101+30. The FNCL 4.5 is UNCH at 104-02. The secondary market current coupon is -1.6bps at 3.679. Yield spreads are at the wides of the week. After much rallying, agency MBS appear exhausted, but I doubt this will last long. Buyers have consistently jumped on any sign of weakness...unfortunately I've already seen a few reprices for the worse....(read more)Posted To: The Garrett Watts Report
After visiting over 100 shops in the past 3 years, we haven't really seen anything “new under the sun” in terms of loan officer agreements. Sometimes I think all contractual documents used by mortgage bankers originated from the same source. But more recently we've come across a few approaches that might eventually be considered the basis for new loan officer agreement practices. I’m not necessarily promoting these ideas, but they are worth discussing. The two additions are: (1) Mandatory reserves for future losses as a result of repurchase loan issues or early pay offs and (2) Good File Delivery Standards and Criteria when submitting loans to processing. Let’s dig a little deeper into these additions... Mandatory Reserves : Most agreements have clauses that...(read more)Citigroup, Inc (NYSE: C) may move a team of proprietary traders into its hedge-fund operations in order to comply with the Dodd-Frank Act, according to a report from Business Week.
The traders, led by Sutesh Sharma, currently operate in Citigroup, Inc (NYSE: C)’s Principal Strategies Unit and would be reassigned to Citi Capital Advisors, which generally oversee money for outside investors, the report said citing anonymous sources. The sources said that Citigroup, Inc (NYSE: C) would likely setup the traders as managers of hedge funds and raise money from outside investors to redeem its stakes.
“This may be a way of keeping a high-margin capital- markets business in the fold, within the language of the law,” said David Hendler, a senior analyst at New York-based research firm CreditSights Inc to Business Week. “They would be transforming it from an- interest-plus-capital-gain business into a fee business.”
Citigroup, Inc (NYSE: C) and Goldman Sachs Group Inc. (NYSE: GS) are among the largest U.S. firms which must pivot to grapple with provisions from the financial reform act which required banks to stop using their own money to wager on securities and markets, a rule advocated by former Federal Reserve Chairman Paul Volcker.
Most banks say that proprietary trading is a small fraction of their total business and that most of their trades are done on behalf of their customers. Citigroup, Inc (NYSE: C)’s proprietary trading activities represented about 2% of the firm’s total 2009 revenue, or about $1.6 billion, the report said. The report also said that Goldman Sachs Group Inc. (NYSE: GS) gets about 10% of its revenue from proprietary trading.
Citigroup, Inc (NYSE: C) is also considering taking members of the Principal Strategies team and distributing them across the bank’s primary client-facing trading operations based on their specialties, said the sources. Stock-savvy proprietary traders could join Citigroup, Inc (NYSE: C)’s single-stock trading team in a specific niche, the sources suggested.