MBS Live: MBS Morning Market Summary
Today's story is a fairly simple one.  It relies on the prologue that bond market momentum has been decidedly skewed toward the weak side for at least a week.  Yesterday was a classic case of several cliche trading metaphors: "don't swim against the tide if you can ride it," "path of least resistance," "no one wants to catch a falling knife," and of course "the beatings will continue until morale improves."  When such snowballs roll, onlookers wonder where the point will be at which investors will be tempted to catch the knife.  That "wondering" was naturally most abject yesterday as 10's hit 2.9, but it wasn't until the start of today's overnight session that we began to get an answer.  Treasuries opened slightly stronger and big volume buying was immediately seen in Asian hours with another moderate dose during European hours.  This is essentially an answer or counterpoint to the metaphors above.  This is where hands begin reaching out to catch the knife.  The question becomes: now what?  The domestic session has been far less convicted than the overnight session, yet has reinforced what's emerging as an important short term pivot point at 2.84% (10yr yields).  Between there and overnight lows of 2.805, we're just consolidating and regrouping ahead of tomorrow's FOMC Minutes.
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
94-27 : +0-17
FNMA 3.5
98-32 : +0-15
FNMA 4.0
102-14 : +0-11
FNMA 4.5
105-01 : +0-08
GNMA 3.0
95-21 : +0-18
GNMA 3.5
100-01 : +0-16
GNMA 4.0
103-07 : +0-13
GNMA 4.5
105-20 : +0-08
FHLMC 3.0
94-17 : +0-17
FHLMC 3.5
98-23 : +0-14
FHLMC 4.0
102-08 : +0-11
FHLMC 4.5
104-17 : +0-08
Pricing as of 11:05 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.
9:11AM  :  Bond Markets Bounce Back Overnight
We've wondered aloud when and if anyone would step in and catch the falling knife that is a low-liquidity bond market selling spree. We now have a contender. Treasuries were very well-bought overnight with high-volume moves lower in yield both in the Asian and European sessions. 10's moved from 2.883 to 2.805 by 4am with some of the best overnight volume this year.

So far this morning, the domestic session has been less than eager to extend the rally, but simply holding sideways leaves us 5bps lower in 10s and 11 ticks higher in Fannie 4.0 MBS. There is no significant data on the calendar, leaving traders to watch and react to other traders and technical levels.

In that regard, 2.84 is shaping up as a pivot point, serving not only as yesterday's key resistance but also as a supportive level today. Add to that the fact that the initial rally in the Asian session saw 10's stop almost perfectly under 2.84 and we have a pretty good line in the sand to assess any leveling-off potential as we move further into domestic hours.
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.
Amitab Mukerjee  :  "precisely for the reasons you say. Reduced hourly wages and burger-flipping jobs as the driver of any positivity in empoyment numbers"
Amitab Mukerjee  :  "JH: I think if a taper was announced earlier in the year, the economy would have bottomed out, and calls for QE4 would be emerging now"
Jason Harris  :  "Again...I could very well be terribly wrong....and I hope I am as i would actually like to see what an economy with good organic growth actually looks like"
Jason Harris  :  "aybe I am crazy but once all this taper announcing is out of the way and the market has a chance to digest the end of QE....I think the talk may turn to whether an economy growing at 1-2% with stagnant wages and a lot of part time jobs should support 10 year yields much higher than where we are....I hope it does as that would be good for us all but I am not sure we don't get one more test of the lows from this spring...."
Michael Gillani  :  "The way I see is if taper is announced to start in Sept, we'll get smacked up a lot more to 3%+ in 10 yr. If taper is pushed off a little, we see a mini rally back to the 2.62-2.75 range or maybe if we're lucky the 2.55-2.62 range."
Nate Miller  :  "yep"
Victor Burek  :  "from yesterday's reprices...I am only seeing about .25 better today...everyone seeing about the same?"
Ben Biscoe  :  "Yeah I was 99.9% sure that was incorrect and knew I could confirm here, love mbs live!"
Matt Hodges  :  "give good advice... the client might try with the other LO and when he realizes you gave him good advice, he will come back. I have a client closing in September that I've maintained a relationship with through 5 years of rocky credit. They finally have an A/E. Those are clients for life"
Victor Burek  :  "so taking advantage of declining market..another no no"
Ben Biscoe  :  "Also just walked away because they were underwater"
Victor Burek  :  "they are getting bad info"
Ben Biscoe  :  "They were late the 3 mos prior. Doing a preapproval and they are talking to someone else and are being told if they put down 10% they don't have to wait the 3 yrs"
Victor Burek  :  "conv. 4yrs with 10% down, 2 yeears with 20% down"
Victor Burek  :  "the larger downpayment shortens the wait period on conventional loans"
Victor Burek  :  "no waiting period if borrower had no late payments on any mortgage or other debts within 12 months preceding the short sale"
Ben Biscoe  :  "Mortgage lates prior to and no extenuating circumstances"
Ben Biscoe  :  "Anyone ever heard or getting around the 3 yr FHA short sale requirement if the down payment is larger?"
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