MBS Live: MBS Morning Market Summary
Treasuries were modestly weaker overnight and yields made a linear move to highs from yesterday afternoon just after the open today.  The first data of the day changed the tone as the NY Fed's Empire State Manufacturing Index came in much weaker than expected.  That was enough to get rates heading back in the other direction.  10yr yields fell from 2.73 to 2.693 and have been well-contained by those boundaries ever since.  MBS rose from 101-05 to 101-16 before similarly retreating back inside their two day range (albeit nearer the highs than the lows!).  There's nothing else significant on the calendar today and technical levels are far from being threatened at the moment.
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
97-06 : -0-02
FNMA 3.5
101-13 : -0-02
FNMA 4.0
104-22 : +0-01
FNMA 4.5
107-01 : +0-01
GNMA 3.0
98-07 : -0-03
GNMA 3.5
102-12 : -0-03
GNMA 4.0
105-15 : -0-01
GNMA 4.5
107-18 : +0-00
FHLMC 3.0
96-24 : -0-03
FHLMC 3.5
101-03 : -0-02
FHLMC 4.0
104-10 : +0-00
FHLMC 4.5
106-23 : +0-01
Pricing as of 11:04 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.

9:23AM  :  ECON: Industrial Production Weaker on Drop in Mining and Utilities
- Industrial Output -0.1 vs +0.2 forecast
- Capacity Use Rate 78.1 vs 78.3 forecast
- Manufacturing Output +0.3 vs +0.3 forecast
- Mining Output -1.6 vs +1.0 forecast
- Utilities -1.1 vs +4.5 forecast
- Market Reaction: just a few more ticks of positivity for bond markets, tempered somewhat by the fact that manufacturing output was in line with the forecast. Treasuries turned green. Fannie 4.0s turned green. Fannie 3.5s are a tick away. Looks like there's some resistance overhead at 101-15.

Industrial production edged down 0.1 percent in October after having increased 0.7 percent in September. Manufacturing production rose 0.3 percent in October for its third consecutive monthly gain. The index for mining fell 1.6 percent after having risen for six consecutive months, and the output of utilities dropped 1.1 percent after having jumped 4.5 percent in September. The level of the index for total industrial production in October was equal to its 2007 average and was 3.2 percent above its year-earlier level. Capacity utilization for the industrial sector declined 0.2 percentage point in October to 78.1 percent, a rate 1.1 percentage points above its level of a year earlier and 2.1 percentage points below its long-run (1972-2012) average.
9:12AM  :  Bond Markets Stronger After NY Fed Data; Close to Unchanged
The overnight session was remarkably straightforward and uneventful. Bond markets weakened in a linear fashion the entire time, and in light-to-moderate volume. 10yr yields moved from 2.695 to 2.733 by the time this morning's 8:30am data hit.

The NY Fed's Empire State Manufacturing Index came in significantly weaker than expected, putting an end to the overnight trend. More accurately, it confirmed that putting an end to the trend was justified (because the move was already underway after the 8:20am CME open). From there, it certainly added emphasis.

10's are now back down to 2.7033 and Fannie 3.5s are up to 101-13--both significantly better than earlier this morning, but both still just barely in negative territory on the day. Industrial Production data is coming up in 2.5 minutes.
8:49AM  :  ECON: Import and Export Prices Both Weaker
- Import Prices -0.7 vs -0.4 forecast
- Export Prices -0.5 vs +0.1 forecast
- Petroleum prices -3.6 vs +0.6 previously, biggest drop since June 2012

U.S. import prices declined 0.7 percent in October, the U.S. Bureau of Labor Statistics reported today, led by lower fuel prices. The October decrease in overall import prices followed comparatively modest advances in each of the previous 3 months. Prices for U.S. exports fell 0.5 percent in October, after a 0.4 percent increase the previous month.

The price index for overall exports decreased 0.5 percent in October, resuming a downward trend following a 0.4 percent increase the previous month. Prior to September, export prices last advanced in February when the index rose 0.7 percent. Export prices also fell over the past 12 months, declining 2.1 percent, the largest year-over-year decrease since a 2.1 percent drop for the year ended in June 2012. The last time the index fell more than 2.1 percent was a 3.6 percent decline between October 2008 and October 2009.
8:41AM  :  ECON: Empire State Index Much Weaker Than Expected
- Business Conditions -2.21 vs +5.0 forecast
- Employment Index 0.0 vs 3.61 previously
- New Orders -5.53 vs 7.75 previously, 1st contraction since June

Reaction: 10yr yields down roughly 2bps. Fannie 3.5 up 6 ticks. This is a 2nd tier data release and the medium-sized movement is appropriate for the size of the miss.

The November 2013 Empire State Manufacturing Survey indicates that manufacturing conditions weakened somewhat for New York manufacturers. The general business conditions index fell four points to -2.2, its first negative reading since May. The new orders index also entered negative territory, falling thirteen points to -5.5, and the shipments index moved below zero with a fourteen-point drop to -0.5. The prices paid index fell five points to 17.1, indicating a slowing of input price increases. The prices received index fell to -4.0; the negative reading was a sign that selling prices had declined—their first retreat in two years. Labor market conditions were also weak, with the index for number of employees falling four points to 0.0, while the average workweek index dropped to -5.3. Despite the negative readings registered by many of the indexes for current activity, indexes for the six-month outlook continued to convey a strong degree of optimism about future business conditions.

Supplementary questions in the latest survey focused on recent and expected changes in the prices paid by firms for several major budget categories, including wages, employee benefits, insurance, energy, and other commodities. Manufacturers, on average, predicted that prices paid for most budget categories would increase at a somewhat faster rate in calendar 2014 than in 2013. Prices paid overall were reported to have risen 3.4 percent on average in 2013 and were expected to increase 4.0 percent in 2014. When asked about expected changes in the prices they charge, firms predicted an average increase of 1.8 percent in 2014. For more details, see the full supplemental report.
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.

Joe Moran  :  "there is a science to it."
Joe Moran  :  "My company is also all internet leads based. you need to have a strong and fast distribution system for when the borrower hits enter on their computer and then a strong follow up system. "
Mark Gordon  :  "It also can't be "part of I do". Working leads is a full time plus job...but if you do it right even very average LO's can close 5-8 loans per month"
Dave Pressel  :  "it's tough going on the rate tables when you gut the rate thin and others are 50 bps lower on rate with no fees, no costs, free oil changes for your cars and everything else you can imagine that has no shot of existing"
Daniel Kramer  :  "mark is right on. interent leads can be very succesful but you have to have LOs that now how to work them, follow up with them, and also know how and which ones to target for your companies strengths. You cant go after everything and everyone, you have to target your leads to your firms strong points. "
Steven M. Sims  :  "Over the years I've paid for leads, and handed them out to my LO's and I absolutely noticed that some of them were much better at turning them into deals than others. I'm betting you are on the high end of that skill"
Mark Gordon  :  "It's all I've been doing for about a decade...there is a very specific model that needs to be followed and the leads need to be really worked...but it works."
Mark Gordon  :  "We are pretty successful with internet based leads."
Rich DiCintio  :  "Gentlemen...does anyone have any proven "real time" internet lead sources they would be willing to share."
Matthew Graham  :  "RTRS- U.S. OCT INDUSTRIAL OUTPUT -0.1 PCT (CONSENSUS +0.2 PCT) VS SEPT +0.7 PCT (PREV +0.6 PCT) "
Jason York  :  "https://vip.vba.va.gov/portal/VBAH/Home"
joon choi  :  "va portal for appraisal order, can some one send me a link"
Victor Burek  :  "maybe that extra week of getting surveys back inflated the numbers like the AP article stated"
Andy Pada  :  "the employment index is sort of shocking, relative to the jobs numbers from last week."
Jeff Anderson  :  "GM, all. That will help keep us in the range, VB."
Matthew Graham  :  "RTRS- NY FED'S EMPIRE STATE BUSINESS CONDITIONS INDEX -2.21 IN NOVEMBER (CONSENSUS 5.00) VS 1.52 IN OCTOBER "

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