MBS Live: MBS Morning Market Summary
Bond markets were nearly unchanged overnight, but leaked incidentally weaker into domestic hours.  Some of the MBS-specific weakness owes itself to simple push and pull between mortgages and broader bond markets.  MBS have outperformed Treasury benchmarks since last week's Yellen-related events, and are experiencing a moderate correction to that trend so far this morning as Treasuries finally found a reason to undergo a correction of their own.

That Treasury correction is fairly incidental as well.  As noted in this morning's commentary, 10yr yields had regressed to a long-term mid-point and weren't as likely to continue making the same sort of gains seen in the last four days.  That's made for some moderate weakness in 10's, but it's still less than 2bps on the day.  Bottom line: moderate weakness in Treasuries plus moderate underperformance in MBS is making for just over a quarter of a point drop in prices, right in the middle of the "yardsticks" discussed here.
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
97-14 : -0-08
FNMA 3.5
101-20 : -0-09
FNMA 4.0
104-29 : -0-07
FNMA 4.5
107-07 : -0-05
GNMA 3.0
98-15 : -0-04
GNMA 3.5
102-19 : -0-10
GNMA 4.0
105-24 : -0-06
GNMA 4.5
107-30 : -0-02
FHLMC 3.0
96-31 : -0-09
FHLMC 3.5
101-10 : -0-09
FHLMC 4.0
104-18 : -0-06
FHLMC 4.5
106-31 : -0-03
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.
11:01AM  :  ALERT ISSUED: Reprice Risk Already Increasing; MBS at Session Lows
Fannie 3.5s are now down 7 ticks on the day at 101-21. This is 5 ticks away from many lenders' rate sheet print times and thus increases negative reprice risk. At this point, we're not yet looking at a "mass reprice" situation, but we could see a few unless prices happen to bounce quickly and convincingly. 10's are up to 2.691.
9:13AM  :  Bond Markets Slightly Weaker Overnight, Looking for Support
Treasuries began the overnight session aimlessly sideways until 10pm. From there, they trended moderately higher in yield and at a pace that continued through to the domestic open. There was a brief pause in that momentum around 6am as German Bunds bounced at their weakest levels of the European session, but the positivity was washed out by 8:10am.

MBS opened in line with yesterday's latest levels but have leaked lower as Treasury weakness commenced. Fannie 3.5s are down 5 ticks on the day at 101-24. 10's are up to 2.694 now from 2.67 at yesterday's close.

There is no significant economic data on tap today, though tradeflow considerations ahead of tomorrow's busy session could still cause plenty of movement.
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.
Christopher Stevens  :  "This is what a SVP told the owner of our company last wednesday at a dinner in San Fransisco "I am 99% sure that Fannie will not be changing their AUS model so an approval you got yesterday you should still get in January.""
mark kent  :  "3% cap is only on loans down to $100K. Once you drop below this level, cap moves to 5%. "
Ira Selwin  :  "I don't think anyone knows for sure. Personally I think they will adjust a bit"
John McClellan  :  "will DU and LP tweak to 43?"
Ira Selwin  :  "Depending on how big a buydown, yes, especially on those lower loan amounts."
Steven M. Sims  :  "wow, if bonafide points are counted toward the 3% for QM, that will put a bit of a damper on every buying down a rate. HMMM"
Ira Selwin  :  "Some investors are taking that approach for now on QM on all loans (Wells Fargo correspondent as an example)"
Ira Selwin  :  "Right - so QM pts/fees doesn't change anything for that. "
John McClellan  :  "really got hard though when the TX supreme court said that even discount pts (bonafide) were also included"
Victor Burek  :  "yes, Texas cashouts have always been limited to 3% in fees"
Victor Burek  :  "on texas cashouts, you are limited to 3% in fees, and that used to not count discount, but it does now which is killing some loans"
Ira Selwin  :  "Some investors are counting all discount towards the 3% testing."
Ira Selwin  :  "Are you guys getting feedback from your employers on the exclusion of bona-fide discount points?"
Michael Gillani  :  "Anyone see the New York Post article last night on the fabrication of data in the Labor Dept. Jobs report to manipulate the UE rate and jobs created figures? Finally, what I've been saying for years is shown to be true! That big beat earlier this month came conveniently in the peak of Obamacare fallout. Trying to fivert attention to positive economic news. The article shows the reports were manipulated in the months leading up to the 2012 election as well!"
Dave Pressel  :  "http://nypost.com/2013/11/18/census-faked-2012-election-jobs-report/"
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