The most recent alert from MBS Live:

Slight Chance of Negative Reprices as MBS hit Lows 3:43PM

This is one of those alerts where we wouldn't be shocked to see a lender or two reprice for the worse, but it certainly wouldn't be justified (the reprice, that is.... Not the shock...).

Volume is so low and the trading range has been so narrow that even saying "lows of the day" is a bit of an overstatement. Fannie 3.5's are at 102-01, which is only 2 ticks lower than the 102-03 technical target. 10yr yields are similarly near their highs of the day, but again, volume and volatility are low, and 10's are still very much in their range (not to mention that it's after the 3pm close and most market participants are moving on to tomorrow).

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Here's a short video clip of the MBS Live Dashboard taken shortly before that alert was issued:

On the topic of "moving on to tomorrow," here's a look at the same stock/Treasury chart from earlier today, now updated with recent trading.  As you can see, 10's basically moved on to thinking about tomorrow ever since nearing the 2% level and regardless of stocks, have done their best to go sideways since.

On the topic of "10's remaining in their broader range," here's an updated version of another chart from this morning that shows, well....  you get the idea... 10's remain in their broader range.

Bottom line, today was surprisingly dead, but with a 10yr auction and FOMC Announcement tomorrow, that could soon change.  Leaking lower in MBS price and seeing an odd reprice for the worse is unfortunate, but don't take it as any sort of indication of a fundamental shift or even short term organic weakness in bond markets.  Bonds are strong like bull, but it's a low data Monday after a relatively important Friday on what's widely regarded as the last trading week of the year amid a cycle of Treasury supply and an FOMC announcement.  In other words, there are factors other than long term demand at play in determining how things trade in the near term.