MBS Live: MBS Afternoon Market Summary
With the exception of some late-day, low volume leakage in Treasuries, both they and MBS put in their weakest levels of the day early in the domestic session and spent the rest of the day chopping around a medium-narrow range.  Somewhat ominously, 10yr yields bounced on a floor in the 1.53's approximately in line with yesterday's high yield, but this could be nothing more than an orderly, technical "ratchet-like" bout of selling ahead of Bernanke on Thursday and correcting from last week's all-time low yields.  As expected, MBS have generally held their ground well in the face of Treasury weakness.  Fannie 3.5's were just a few ticks shy of unchanged to begin the day, and actually broke into the green on a few occasions, but by the Treasury close, lows were revisited and a sideways range established, centering on 104-26.  We'll note that this "sideways at 104-26" business is a marked improvement from yesterday's nearly half-point sell-off, and hopefully a sign that we're finding a bottom.  Europe and Fed-Speak are likely to play a bigger role in determining that than mere technical levels however.  
MBS Pricing Snapshot
Pricing shown below is delayed, please note the timestamp at the bottom. Real time pricing is available via MBS Live.
FNMA 3.5
104-26 : -0-05
FNMA 4.0
106-06 : -0-02
FNMA 4.5
107-01 : -0-01
FNMA 5.0
108-04 : -0-02
GNMA 3.5
106-21 : -0-04
GNMA 4.0
108-30 : -0-01
GNMA 4.5
109-16 : -0-01
GNMA 5.0
110-09 : -0-03
FHLMC 3.5
104-19 : -0-05
FHLMC 4.0
105-25 : -0-04
FHLMC 4.5
106-16 : -0-01
FHLMC 5.0
107-14 : -0-01
Pricing as of 4:08 PM EST
Afternoon Reprice Alerts and Updates
Below is a recap of instant Reprice Alerts and updates issued via email and text alert to MBS Live subscribers this afternoon.

3:06PM  :  ALERT ISSUED: Post Treasury Close Volatility Creating Minor Reprice Risk
It's a bit early yet to assume that we won't see a bounce back, but wanted to give you a heads-up nonetheless. As is sometimes the case, we've seen things get a bit choppy following the 3pm Treasury close. So far, Fannie 3.5's have held their lows of the day and 10yr yields haven't broken highs, but it is the most pronounced but of weakness we've seen in the otherwise narrow session. Reprice risk is present, but minimal for now.
12:50PM  :  Limited Follow-Through On Technical Break in 10's. None For MBS
10yr yields made it to the low 1.53's before changing their mind about the a technical break lower from the morning's dominant point of resistance just over 1.54. Some of the weakness could be attributed to an earlier Dow Jones wire that a German Newspaper claims the EFSF has prepared a Spanish bailout credit line "just in case." Spain and EU's Ollie Rehn followed up by saying something to the effect of "nuh uh!"

MBS never followed the move much anyway, and are right back to their sideways grind between 104-24 and 104-29 (maybe 104-30 now) and we're right back to waiting for something to change. Sideways... Contained... Boring... For now.
12:05PM  :  ALERT ISSUED: Nice Technical Breakout In 10's. Hoping It Lasts. So Far So Good
Something just over 1.54 had been providing fairly stalwart resistance to 10yr yields moving lower this morning--several bounces, but no dice until the last few moments.

10's broke down into the 1.53's and have maintained those levels so far. More importantly, there were frequent "bumps against the ceiling" right after the breakout, which is characteristic of a pivot-point breakout and helps establish the technical significance. In other words, it's like the 10yr yields are telling us "Yes, that was a good level to watch, and it's important to us too."

MBS's script is a bit different:
"Dear MBS watchers, while we can appreciate the technical breakout in 10yr yields, and indeed are willing to trade slightly higher in price, we're not overly eager to follow said breakout in lock-step as we seem to be on the receiving end of another dose of new origination supply whenever MBS originators see opportunities to hedge. This has been a problem for us both today and yesterday. We hope you understand and look forward to outperforming again if Treasuries flatten out or move higher in yield. If they move too high in yield, we apologize in advance for Fannie Mae 3.0 30yr coupons, which may not be up to such a task. Sincerely, Fannie 3.5's"

(FYI, in the time it took to concoct that literary masterpiece, 10's are back up to the low 1.54's to test the pivot point yet again--so far holding. But the moral of the story is that we haven't yet seen a clearcut shift in momentum. MBS haven't really batted an eyelash, likely for the reasons alluded to above (i.e. falling TSY yields = wider spreads = opportunity to sell/hedge)).
Live Chat Featured Comments
A recap of the featured comments from the MBS Live Dashboard's Live Chat feature, utilized by hundreds of industry professionals each day.

MC  :  "REPRICE: 2:51 PM - Provident Funding Better"
seth palagyi  :  "for PA lenders PHFA is rolling out a true no-credit qualifying streamline within days; no fico overlay, no appraisal"
Ted Rood  :  "Are FPF/Strerns and Nationstar doing those for correspondents, or just brokered loans?"
Kent Mikkola #353976  :  "Nationstar will also do 620 FHA streamlines"
Grant R. Menard  :  "Edie. FPF /Stearns should handle that"
Ted Rood  :  "Wouldn't want folks with perfect mortgage histories but marginal scores to improve their economic outlook, even though HUD guarantees their loans!"
Matt Hodges  :  "WF just removed their exception policy 620-639 and will only take 640+"
Edie Clark  :  "Any Lenders out there doing FHA Streamlines under 640...I have one at 637 and one at 629...our Investors stuck at 640."
Victor Burek  :  "no..had a few that could go from 30 to 25, but never 30 to 15"
Scott Valins  :  "does that ever even apply? Going from 30 to 15 and halving the rate still makes the payment higher"
Jeff Statz  :  "Thanks Robin! i'll check it out. so, this would only take effect for streamlines also meeting the >5% reduction in PIMI. I am going to discuss this with that underwriter. Thanks! Sorry Vic :]"
Robin Baran  :  "Jeff, fha put out an email on 3-20 that clarifys ML 2011-11 and said a reduction in terms qualifies for streamline as long as it is within the net tangible benefits. It is spelled out in the FAQ's under net tangible benefits #12."
Jeff Statz  :  "Everyone, 6/11/12 Streamline details is on page 3, here: http://portal.hud.gov/hudportal/documents/huddoc?id=12-04ml.pdf"
Jeff Statz  :  "FHA Streamlines, just posted this earlier"
Victor Burek  :  "only streamlines SV..so nothing can be rolled in"
Scott Valins  :  "do the new FHA enhancements for 6/11 only apply to streamlines or can they be applied to regular rate/term FHAs?"
Adam Quinones  :  "This is common behavior especially after setting new record highs. Depending on your view, whether or not you're just staying "optimal" vs. riding the rally and adding hedges as needed, it could mean desks think MBS prices have topped (the latter group's decision to add coverage indicates potential price top)"
Adam Quinones  :  "big day of origination carrying over into today..."
Adam Quinones  :  "when spreads stop widening, traders are willing to buy the swap and get paid that fixed rate bc they think rates could go lower. "
Adam Quinones  :  "when spreads start to widen out following a rally, it means that rates may have bottomed"
Adam Quinones  :  "it means the floating rate moved high enough to get the attention of yield buyers"
Scott Valins  :  "what does it mean AQ?"
Adam Quinones  :  "swap spreads stopped gapping out. That's a good thing...for now."

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