MBS Live: MBS Morning Market Summary
For Fannie 3.5s and 10yr Treasuries, the trading levels that finally offered support at the end of Friday's sell-off, have turned into resistance so far this morning. More simply put, Friday's floor is today's ceiling for MBS (or vice versa for Treasuries). Not that it's much of a consolation, but Fannie 4.0s (and yes, they're a part of the production section of the MBS stack now) are currently trading fairly well with respect to Friday's range, but only after joining 3.5s for brief, scary ride lower into 9:30am. Before then, Treasuries had opened just slightly weaker after a slightly stronger overnight session. Domestic trading brought increased volatility and 10yr yields have been on the ropes over 2.20 since just before the cash open for Stocks. There's been no relevant scheduled data though S&P (the ratings agency) did upgrade the US sovereign outlook to AA+. This looked to have had a positive effect on equities more than anything, but the stock lever swings may account for some of the more pronounced weakness around 9:30am.
MBS Pricing Snapshot
Pricing shown below is delayed, please note the timestamp at the bottom. Real time pricing is available via MBS Live.
FNMA 3.0
99-27 : -0-06
FNMA 3.5
103-04 : -0-02
FNMA 4.0
105-09 : +0-00
FNMA 4.5
106-25 : +0-03
GNMA 3.0
101-06 : -0-06
GNMA 3.5
104-15 : -0-01
GNMA 4.0
105-31 : +0-02
GNMA 4.5
106-25 : +0-03
FHLMC 3.0
99-17 : -0-06
FHLMC 3.5
102-31 : -0-01
FHLMC 4.0
105-04 : +0-00
FHLMC 4.5
105-28 : +0-03
Pricing as of 11:06 AM EST
Morning 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 morning.
9:35AM  :  ALERT ISSUED: Pressure on MBS Continues; Well into Lows
Not that rate sheets were out before this morning's more serious sliding occurred, but if you otherwise have access to overnight pricing, this would technically be a reprices alert as Fannie 3.5s are now down 8 ticks on the day at 102-30. With 10'sbreaking over 2.22, the trend continues to be anything but a friend for MBS.

Global markets look to have reacted to the S&P sovereign upgrade of the US, but especially equities futures. That said, they've held steady in the first few minutes of the domestic cash open and are losing a bit of ground now. That bounce coincides with 10's moving back to 2.2113, suggesting the stock lever could continue to be in play on this data-less day.
9:17AM  :  MBS Turn Negative Amid Domestic Session Volatility
Overnight trading in Treasuries began quietly, despite big moves in Japanese markets (particularly stocks). European markets also saw heightened volatility fall on deaf ears and it wasn't until early domestic trading go underway that Treasury volume and volatility picked up--in generally unfriendly directions.

After holding mostly in the 2.16 range during Asian and early European market hours, 10yr Treasuries moved up to 2.186 by 6:24am NY time. From there, they've chopped their way over 2.19 in a wider trading range than overnight. MBS turned red on the latest move with Fannie 3.5s down a tick at 103-05. Momentum feels unfriendly so far.

There are no significant scheduled economic reports today and few potential market-moving events. Fed's Bullard speaks at 11am and markets will take anything they can get in terms of gleaning clues ahead of next week's FOMC Announcement.

Long term technical levels leave room for further losses, so with not much going on this week apart from the Treasury auction cycle, we wouldn't be against negative momentum until it's run its course. Incidentally, it continues to run that course as this is typed, with 10's now up over 2.20 and Fannie 3.5s down another tick.
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.
Matthew Graham  :  "RTRS - FED'S BULLARD: "SURPRISINGLY LOW" INFLATION MAY MEAN FED CAN MAINTAIN AGGRESSIVE ASSET BUYING OVER LONGER TIME FRAME "
Matthew Graham  :  "RTRS- FED'S BULLARD ALSO SAYS IMPROVEMENT IN LABOR MARKET CONDITIONS SUGGESTS FED COULD SLOW PACE OF MONTHLY ASSET PURCHASES "
Matt Hodges  :  "i think it's clear "Additionally, if income used to qualify the borrower exceeds that of the two year average..." meaning using YTD quarterly"
Matt Hodges  :  "findings do call for 2 years returns... i'm asking if u/w could consider ONLY the most recent year"
Victor Burek  :  "I am pretty sure everyone I had, findings called for 2 years"
Matt Hodges  :  "on FHA loans, self-employed - is there ever an ability to use just the most year's return? I believe you must average or if declining, you must use most recent year. "
Matthew Graham  :  "links to both buying programs on this page: http://www.newyorkfed.org/markets/pomo_landing.html . Good info for those who are interested."
Matthew Graham  :  "Treasury buying is only mostly every day. "
Matthew Graham  :  "MBS vary, Treasuries are on a forward calendar"
Matthew Carver  :  "is there a specific time each day or does it vary? RE: Fed buying"
Matthew Graham  :  "looks like equities liked it as well"
Victor Burek  :  "dollar strengthen considerably against yen since s&p outlook upgrade"
Jeff Anderson  :  "S&p just upgraded the US sovereign credit rating to Stable. Do they still have any credibility?"
Matthew Graham  :  "3.5s because a majority of loans originated will (probably) fill that bucket more than 3.0s or 4.0s at the moment (but 4.0s aren't far behind)."
Joe Prine  :  "why 3.5?"
Clayton Sandy  :  "3.5 "
joon choi  :  "which coupon should i watch 3.0 or 3.5?"
Andy Pada  :  "so if we begin the slow grind of 2/32nds everyday for the next 3 months, we should be good."
Ted Rood  :  "It's not about data at this point, it's about expectations and momentum. Hard to offset those with mere data."
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