MBS Live: MBS Afternoon Market Summary
It was a surprisingly calm and stable day to begin the week with little by way of scheduled events to move markets. Even the headlines from European leaders and FOMC speakers didn't cause any any major volume or volatility. MBS and Treasuries both simply eased their way toward better levels, but were clear to pay attention to the boundaries laid out on Thursday and Friday of last week. So far, that means bond markets are behaving as expected given that Friday and today have been fairly data-free. It seems like a bit too much to ask for the range to stay this narrow over the next three days, but that said, the current philosophy is that of "sideways inertia" even if an increasing level of volatility makes for a wider sideways pattern. The biggest threats to the inertia begin hitting as early as this Friday with Bernanke's Jackson Hole address. Between now and then, it will take a big beat/miss on data or a similarly unexpected headline to convince any hands to reach out with so many falling knives in the air.
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
105-19 : +0-05
FNMA 4.0
106-30 : +0-04
FNMA 4.5
108-00 : +0-01
FNMA 5.0
108-30 : +0-01
GNMA 3.5
107-25 : +0-05
GNMA 4.0
109-13 : +0-03
GNMA 4.5
109-18 : +0-02
GNMA 5.0
110-14 : +0-01
FHLMC 3.5
105-12 : +0-04
FHLMC 4.0
106-21 : +0-04
FHLMC 4.5
107-14 : +0-02
FHLMC 5.0
108-05 : +0-02
Pricing as of 4:04 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.
12:48PM  :  ALERT ISSUED: Slow, Steady Grind To Stronger Levels
There continues to be little if anything catching markets' collective attentions as we head into the afternoon hours. Apart from calendar roll trading in Treasury futures mentioned earlier as well as a small uptick in activity around the scheduled Fed buyback, volume has been light, but pleasantly, so has volatility.

Fannie 3.0's have traded in a surprisingly narrow range with noticeable, but mild positive slope, varrying them from 103-02 this morning to 103-09 currently. Depending on timing, roughly 3 ticks of that 7 tick improvement have been seen since rate sheets came out.

So it's conceivable that the "early crowd" is considering a positive reprice, and beyond that, the calm and positive trend could motivate a so-called "stability reprice" among a lender or two. But given the current shape of trading, we're not holding out for every lender to reprice. If this trend continues unabated toward the close, however, we would expect to see a few.
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.
Michael Mitchell  :  "Edgar that is the same news I was hearing. That's a .375% raise for our office."
Edgar  :  "Hey everyone. Anyone use ST (broker) and talk to their rep about the "new" comp plan? Spoke to mine briefly and it appears brokers in CA are being set at 1.375%."
Dustin McAlister  :  "REPRICE: 3:38 PM - Wells Fargo Better"
Clayton Sandy  :  "Wells did not allow for it. "
Clayton Sandy  :  "That's what I thought, but not all lenders are on board with that one. "
Bryce Schetselaar  :  "Clayton, part of HARP 2.0 was to unlock that ability--to go from an OO to a NOO."
Clayton Sandy  :  "Have to be delivered in the same manner as it was originally delivered OR if it was n/o/o originally, it can go to o/o or second home. Usually, if the risk is increasing, you can't do it. "
Ken Crute  :  "sc, if they go back to their servicer, they will do it manual. LP likes to steer as much back to servicer as possible "
Tom Bartlett  :  "whohoo!"
Tom Bartlett  :  "REPRICE: 2:34 PM - Interbank Better"
Steve Chizmadia  :  "Just don't get it. No reason it should not be an accept"
Steve Chizmadia  :  "Already selected"
Nate Miller  :  "there's a drop down in LP where you have to state it's being UW on the Freddie Relief Refi program...if that's already selected it's probably not eligible..."
Steve Chizmadia  :  "My AE seems to think it is because original use for the original loan was OO and we are going NOO now"
Steve Chizmadia  :  "I think LPRR frowns upon NOO and condo combination"
Steve Chizmadia  :  "I've got a LP, less than 100% LTV, NOO condo, ratios are 26.2/32, Mid fico is 740, and I have $110,000 in reserves and I cannot get a AE. Any suggestions? "
Jeff Statz  :  "http://mortgageinsurance.genworth.com/RatesAndGuidelines/RateFinder.aspx"
Jeff Statz  :  "looks like GE reduced their MI rates lately"
Ted Rood  :  "Nothing good if you ask me."
Matthew Graham  :  "Define the MBS market without the Fed. It's hard to do right now. And it's hard to know what would happen if the implicit or explicit backstop were removed."
Matthew Graham  :  "let's not overcomplicate it though... Sandy's saying what we've been saying for 3-4 years... "
Matthew Graham  :  "I guess that depends on your definition of "functioning." If we're asking whether or not trading levels are distorted due to the Fed's presence and policy verbiage, yes. If we're asking if there would be a material change in trading levels if they removed their "presence" in those markets, then certainly MBS are at a much bigger risk of distortion than the short end of the yield curve"
Andrew Horowitz  :  "MG is there a functioning market now for the 2-5 year treasuries? in your opinion"
Matthew Graham  :  "RTRS- FED'S PIANALTO SAYS MORE LARGE-SCALE ASSET BUYS CAN BE EFFECTIVE BUT NEED MORE ANALYSIS "
Matthew Graham  :  "tardy to party by a few years as well"
Matthew Graham  :  "methinks she speaks of MBS"
Matthew Graham  :  "RTRS - PIANALTO SAYS FED PRESENCE IN CERTAIN SECURITIES MARKETS COULD BECOME SO LARGE THAT IT WOULD DISTORT MARKET FUNCTIONING "
Matthew Graham  :  "Oh, I'm sure they'll activate,and I'm sure it will be underwhelming to the point that we look back and and chuckle at Draghi's London rant"
Victor Burek  :  "the date for activation is the fifth of neverary"
Matthew Graham  :  "no major reaction"
Jason Wilborn  :  "doesnt look like it"
Jason Wilborn  :  "interesting MG - market reacting?"
Matthew Graham  :  "RTRS - ASMUSSEN GIVES NO DATE ON WHEN ECB COULD ACTIVATE NEW BOND-BUY PLAN "
Matthew Graham  :  "RTRS- ASMUSSEN - ECB WORKING ON TECHNICAL, OPERATIONAL DETAILS OF NEW PLAN AHEAD OF NEXT POLICY MEETING "
Matthew Graham  :  "RTRS- ASMUSSEN - ECB WILL ENSURE NEW BOND-BUY PLAN DISPELS ANY CONCERNS ABOUT STATE FINANCING "
RJ Hartnett  :  "REPRICE: 11:57 AM - Flagstar Better"
Matthew Graham  :  "RTRS- DEALERS SUBMITTED $4.24 BLN OF TREASURIES FOR CONSIDERATION IN FED PURCHASE -NY FED "
Matthew Graham  :  "RTRS- FED BOUGHT $1.83 BILLION OF TREASURIES MATURING BETWEEN FEB 2036 AND AUG 2042 -NY FED "
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