MBS Live: MBS Morning Market Summary
Essentially, the overnight session and morning trading have validated yesterday's post-FOMC Minutes movement.  Volume has been strong and steady for the duration, and the longer we continue to see good volume at yesterday afternoon's levels (or better), the more we feel as if we're waking up after a potentially real dream to find that it was very real indeed.  Case in point: we haven't seen gains or much by way of volatility coincide with any particular news or data this morning.  Rather, there's just been a default, steady push toward better levels, even if only minimally so.  Still... we'll take it.  First day of confirming a return to reality is shaping up nicely, and barring something unforeseen, closer to "over" than not.
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
105-20 : +0-04
FNMA 4.0
106-31 : +0-02
FNMA 4.5
108-01 : +0-00
FNMA 5.0
108-29 : +0-00
GNMA 3.5
107-25 : +0-05
GNMA 4.0
109-13 : +0-03
GNMA 4.5
109-18 : +0-01
GNMA 5.0
110-13 : +0-00
FHLMC 3.5
105-14 : +0-05
FHLMC 4.0
106-21 : +0-02
FHLMC 4.5
107-16 : +0-02
FHLMC 5.0
108-06 : +0-00
Pricing as of 11:08 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.

10:11AM  :  ECON: Home Prices +0.7 Percent In June, +3.6 Year Over Year
U.S. house prices rose 1.8 percent from the first quarter to the second quarter of 2012 according to the Federal Housing Finance Agency’s (FHFA) seasonally adjusted purchase-only house price index (HPI). The HPI is calculated using home sales price information from Fannie Mae and Freddie Mac mortgages. Seasonally adjusted house prices rose 3.0 percent from the second quarter of 2011 to the second quarter of 2012. FHFA’s seasonally adjusted monthly index for June was up 0.7 percent from May.

“Although some housing markets are still facing significant challenges, house prices were quite strong in most areas in the second quarter,” said FHFA Principal Economist Andrew Leventis. “The strong appreciation may partially reflect fewer homes sold in distress, but declining mortgage rates and a modest supply of homes available for sale likely account for most of the price increase.”
10:05AM  :  ECON: New Home Sales Slightly Higher Than Expected
* 372k annual rate vs 365k consensus
* +3.6 pct vs upwardly revised -3.5 pct in June, previously -8.4
* That upward revision of the previous cycle is probably more significant than the moderate beat on today's headline, but bond markets aren't doing much with it so far.


Sales of new single-family houses in July 2012 were at a seasonally adjusted annual rate of 372,000, according to estimates released jointly today by the U.S. Census Bureau and the Department of Housing and Urban Development. This is 3.6 percent (±14.1%)* above the revised June rate of 359,000 and is 25.3 percent (±18.2%) above the July 2011 estimate of 297,000.

The median sales price of new houses sold in July 2012 was $224,200; the average sales price was $263,200. The seasonally adjusted estimate of new houses for sale at the end of July was 142,000. This represents a supply of 4.6 months at the current sales rate.
10:01AM  :  Freddie Mac: Fixed Rates Move Higher for Fourth Consecutive Week
30-year fixed-rate mortgage (FRM) averaged 3.66 percent with an average 0.7 point for the week ending August 23, 2012, up from last week when it averaged 3.62 percent. Last year at this time, the 30-year FRM averaged 4.22 percent.

15-year FRM this week averaged 2.89 percent with an average 0.7 point, up from last week when it averaged 2.88 percent. A year ago at this time, the 15-year FRM averaged 3.44 percent.

5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 2.80 percent this week with an average 0.6 point, up from last week when it averaged 2.76 percent. A year ago, the 5-year ARM averaged 3.07 percent.

1-year Treasury-indexed ARM averaged 2.66 percent this week with an average 0.4 point, down from last week when it averaged 2.69 percent. At this time last year, the 1-year ARM averaged 2.93 percent
9:07AM  :  ECON: PMI Continues To Signal Weak Manufacturing Expansion
* Slight rise in the headline PMI index but third- lowest reading in 35 months

*ƒ Growth of output and new orders remain modest

ƒ* Employment increases at slowest pace since December 2010

ƒ * Marginal falls in input and output prices

The Markit Flash U.S. Manufacturing Purchasing Managers’ Index continued to signal only a modest improvement in U.S. manufacturing business conditions in August. The preliminary ‘flash’ PMI reading which is based on around 85% of usual monthly replies rose slightly from 51.4 in July to 51.9 and was the third-lowest since the manufacturing recovery was first indicated by the headline index in October 2009.

PMI index readings above 50.0 signal an increase or improvement on the prior month, while readings below 50.0 indicate a decrease. Manufacturing production rose further in August, taking the current sequence of growth to 35 months. Although having strengthened since July, the latest expansion was only modest and the second-weakest in over a year.

8:58AM  :  ALERT ISSUED: Bond Markets Open In Relatively Unchanged Territory. Claims Help Slightly
10yr yields were mostly flat to slightly higher in the first part of the overnight session, but Europe were buyers when they got in for the day, taking yields briefly under 1.68. Pretty hefty technical resistance there and it made good enough sense to not see it casually broken overnight. Still, the resulting drift higher was greatly mitigated by two factors:

A) It only saw yields move as high as 1.707, and
B) Jobless Claims were slightly bond-market-positive

All told, we're back under 1.692 currently, roughly unchanged from 5pm levels and slightly improved from the official 3pm Treasury close. MBS are also unchanged from 5pm levels and haven't moved much this morning, with Fannie 3.0s at 103-06 and 3.5s at 105-16.

Claims did more to hurt stocks than to help bonds, but that's OK. We weren't expecting an impact in light of yesterday's more significant bond market motivation. Next up is Markit PMI at 8:58
8:37AM  :  ECON: Jobless Claims Higher Than Expected
* Claims 372k vs 365k consensus
* 4-week average up to 368k from 365.25k
* Continued Claims up to 3.317 mln vs 3.30 mln conensus

In the week ending August 18, the advance figure for seasonally adjusted initial claims was 372,000, an increase of 4,000 from the previous week's revised figure of 368,000. The 4-week moving average was 368,000, an increase of 3,750 from the previous week's revised average of 364,250.

The advance seasonally adjusted insured unemployment rate was 2.6 percent for the week ending August 11, unchanged from the prior week's unrevised rate.

The advance number for seasonally adjusted insured unemployment during the week ending August 11, was 3,317,000, an increase of 4,000 from the preceding week's revised level of 3,313,000. The 4-week moving average was 3,311,500, an increase of 6,500 from the preceding week's revised average of 3,305,000.
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  :  "some say 1.67, some say 1.69. We've said both at times, so take your pick.... Either testing, breaking or bouncing. Too soon to tell today and maybe no additional "vote" for any of those options. Bottom line though, we're back at the doorstep of the exceptionally low-yield June/July time frame."
Matthew Graham  :  "So basically, that's where we are now. Coincides with gigantically important, long term "high 1.6's" pivot in 10's"
Matthew Graham  :  "big rally july 6th... MBS broke over 103-10 for the irst time ever... ended up coming back for supportive bounces several times in July and a few times in early August, 103-07 to 103-10 zone. "
Andy Pada  :  "MG, any technicals of which we should be cognizant?"
MMNJ  :  "http://news.yahoo.com/woman-loses-4-68m-down-payment-nyc-apartment-193656947--abc-news-savings-and-investment.html"
Matthew Graham  :  "RTRS- US HOMES FOR SALE AT END OF JULY RECORD LOW 142,000 UNITS VS JUNE 143,000 UNITS "
Matthew Graham  :  "RTRS- US JULY MEDIAN SALE PRICE $224,200, -2.5 PCT FROM JULY 2011 ($229,900) "
Ted Rood  :  "Sure my appraisers will take that into account on all deals."
Matthew Graham  :  "RTRS- US JULY SINGLE-FAMILY HOME SALES +3.6 PCT VS JUNE -3.5 PCT (PREV -8.4 PCT) "
Matthew Graham  :  "RTRS- US JULY SINGLE-FAMILY HOME SALES 372,000 UNIT ANN. RATE (CONS 365,000) VS JUNE 359,000 (PREV 350,000) "
Matthew Graham  :  "RTRS- U.S. HOME PRICES +3.6 PCT IN 12 MONTHS THROUGH JUNE - U.S. REGULATOR "
Matthew Graham  :  "RTRS- U.S. HOME PRICES +0.7 PCT IN JUNE FROM MAY - U.S. REGULATOR "
Matthew Graham  :  "RTRS - MARKIT U.S. MANUFACTURING SECTOR FLASH PMI EMPLOYMENT INDEX FOR AUGUST AT 52.5 VS FINAL 52.7 IN JULY "
Matthew Graham  :  "RTRS- MARKIT U.S. MANUFACTURING SECTOR FLASH PMI NEW ORDERS INDEX FOR AUGUST AT 52.6 VS FINAL 51.0 IN JULY"
Matthew Graham  :  "RTRS- MARKIT U.S. MANUFACTURING SECTOR FLASH PMI OUTPUT INDEX FOR AUGUST AT 52.4 VS FINAL 51.7 IN JULY "
Matthew Graham  :  "RTRS - MARKIT U.S. MANUFACTURING SECTOR FLASH PMI FOR AUGUST AT 51.9 (CONSENSUS 51.2) VS FINAL 51.4 IN JULY "
Jason Zimmer  :  "Me too MH...but it still needs to go. I would love to eat lock extensions but the law won't let me."
Matt Hodges  :  "ehhh... having the best year of my career, just wish it were more purchase than refi"
Jason Zimmer  :  "Step 4. repeal LO comp rule"
Matt Hodges  :  "Step one: fix the fiscal cliff Step two: give business a known playing field so they aren't stuck in neutral. Step three: lower burden/regulation on business, esp. small biz"
Brent Borcherding  :  "What is the answer?"
Matthew Graham  :  "damage is already done, and isn't "fixable" per se. Just another morphine shot to ease the inevitable pain"
Jeff Anderson  :  "I agree too. There will have to be a little pain before things really get better. Not sure if QE3 helps long term. Sounds like another short term sugar rush. Not sure it takes a permanent hold this time either."
Matt Hodges  :  "everyone is afraid to call it like it is. rip the bandaid off, fix it"
Matthew Graham  :  "RTRS - BULLARD: BEFORE SUPPORTING MORE FED ACTION, WOULD LIKE TO SEE SOME DETERIORATION IN ECONOMY OR SIGNS GROWTH WAS GOING TO SLIDE "
Matt Hodges  :  ""moderate payroll growth"? what is he smoking?"
Matthew Graham  :  "RTRS- FED'S BULLARD: SLOW-PACED US RECOVERY NOT ENOUGH TO JUSTIFY "GIGANTIC ACTION" BY FED "
Matthew Graham  :  "RTRS - FED'S BULLARD SAYS LATEST US JOBLESS CLAIMS DATA CONSISTENT WITH MODERATE PAYROLL GROWTH-CNBC "
Jeff Anderson  :  "We're gonna need a bigger pricing box."
Matthew Graham  :  "RTRS - US CONTINUED CLAIMS ROSE TO 3.317 MLN (CONS. 3.300 MLN) AUG 11 WEEK FROM 3.313 MLN PRIOR WEEK (PREV 3.305 MLN) "
Matthew Graham  :  "RTRS - US JOBLESS CLAIMS 4-WK AVG ROSE TO 368,000 AUG 18 WEEK FROM 364,250 PRIOR WEEK (PREVIOUS 363,750) "
Matthew Graham  :  "RTRS- US JOBLESS CLAIMS ROSE TO 372,000 AUG 18 WEEK (CONSENSUS 365,000) FROM 368,000 PRIOR WEEK (PREVIOUS 366,000) "
Victor Burek  :  "sure hope so"
Oliver S. Orlicki  :  "rally continues today?"
Jon  :  "The final days post "MBS RECAP: What A Difference A Day Makes", pretty much sums it up in the shortest way possible! Cheers to another day of green on Thursday!"

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