Mortgage bonds (MBS) are unchanged at slightly down intraday levels after today’s Fed statement didn’t reveal any strategy changes. Below is today’s statement side by side with the September 13 statement which announced QE3. Key MBS coupons lenders use as benchmarks to price rates are down: 3% coupon -8 basis points, 3.5% coupon -5 basis points. And this is causing rates to be slightly higher today vs. yesterday.
UPDATE 1:13 p.m. PACIFIC: Rates have sold off considerably since this post went up right after Fed meeting. Here’s a snapshot* of key Fannie MBS coupons. Rates rise when MBS prices drop like this.
*used with permission from MBS Live.