MBS and Treasuries began the day in unchanged territory.  There was a bit of a positive backdrop in place from overnight news that Germany's central bank would support aggressive monetary policy action.  EU bond markets benefited more directly from that news, but Treasuries were perhaps better able to avoid slipping into weaker territory.

The big market mover of the day arrived 30 minutes later with an exceptionally weak Retail Sales report.  Versus an expectation of 0.4%, the headline for April only managed a 0.1% gain.  The internals were even weaker as sales actually fell when Auto and Gas sales were excluded.

10yr yields dropped from 2.66 to 2.63 initially, and then worked their way down to 2.62 before settling down.  Fannie 3.5 MBS jumped from 101-19 to 101-26 initially, and have gradually added another 3 ticks since then (101-29).  Most of the gains were intact before the first rate sheets of the day, thus limiting positive reprice potential.

MBS Pricing Snapshot
Pricing shown below is delayed, please note the timestamp at the bottom. Real time pricing is available via MBS Live.
MBS
FNMA 3.0
97-23 : +0-10
FNMA 3.5
101-29 : +0-10
FNMA 4.0
105-00 : +0-09
Treasuries
2 YR
0.3910 : -0.0080
10 YR
2.6215 : -0.0345
30 YR
3.4557 : -0.0363
Pricing as of 5/13/14 12:00PMEST
Morning Reprice Alerts and Updates
A recap of Alerts and Updates provided to MBS Live subscribers.
8:55AM  :  Bond Markets Stronger After Retail Sales, German Central Bank News
Live Chat Featured Comments
A recap of featured comments from the Live Discussion on the MBS Live Dashboard.
Matthew Graham  :  "RTRS- US APR RETAIL SALES +0.1 PCT (CONSENSUS +0.4 PCT) VS MAR +1.5 PCT (PREV +1.2 PCT)"
Matthew Graham  :  "RTRS- US APR RETAIL SALES EX-AUTOS UNCHANGED (CONS +0.6 PCT) VS MAR +1.0 PCT (PREV +0.7 PCT)"
Christopher Stevens  :  "looking forward to hear what Mel has to say at 9:30"
Matthew Graham  :  "RTRS - U.S. HOUSING REGULATOR WATT SAYS FEDERAL HOUSING FINANCE AGENCY WILL NOT REDUCE CURRENT LOAN LIMITS FOR FANNIE MAE, FREDDIE MAC"
Matthew Graham  :  "RTRS - WATT SAYS FANNIE MAE AND FREDDIE MAC ARE RELAXING GUIDELINES FOR WHEN BANKS MUST BUY BACK FAULTY LOANS"
Matthew Graham  :  "RTRS- WATT SAYS FANNIE MAE, FREDDIE MAC TO LAUNCH PILOT PROGRAM IN DETROIT TO PROVIDE DEEPER LOAN MODIFICATIONS, EXPECT PROGRAM TO BE EXPANDED TO OTHER PARTS OF COUNTRY"
Matthew Graham  :  "RTRS - REGULATOR WORKING TO REACH ABOUT 750,000 BORROWERS ELIGIBLE TO REFINANCE FANNIE AND FREDDIE BACKED LOANS UNDER HARP PROGRAM, WATT SAYS"
Matthew Graham  :  "RTRS - FANNIE, FREDDIE WILL NOT BE REQUIRED TO REDUCE SUPPORT FOR MULTIFAMILY LENDING IN 2014, WATT SAYS"
Matthew Graham  :  "RTRS - REGULATOR NOT SEEKING TO HAVE FANNIE, FREDDIE CONTRACT MARKET PRESENCE TO PREVENT ADVERSE IMPACT ON LIQUIDITY, WATT SAYS"
Matthew Graham  :  "RTRS - FANNIE AND FREDDIE REQUIRED TO TRIPLE CREDIT RISK TRANSFERS FOR SINGLE-FAMILY GUARANTEE BUSINESS FROM $30 BILLION TO $90 BILLION, WATT SAYS"
Matthew Graham  :  "RTRS - FANNIE AND FREDDIE REQUIRED TO CONTINUE REDUCING RETAINED PORTFOLIO TO NO MORE THAN $250 BILLION EACH BY 2018, WATT SAYS"
Scott Valins  :  "I wonder where they got the 750k for HARP eligible borrowers. Could that be all that's left?"
Andy Pada, Jr.  :  "Watt pretty definitive on NOT expanding HARP."
Scott Valins  :  " are those LLPA adjustments that Watt suspended still indefinitely suspended or removed completely?"
Matthew Graham  :  "RTRS - U.S. MARCH BUSINESS INVENTORIES +0.4 PCT (CONSENSUS +0.4 PCT) VS FEB +0.5 PCT (PREV +0.4 PCT)"
Roger Moore  :  "speaking of compliance...a little tid bit for you all. Stearns and Plaza will NOT allow you to reduce your commission on a borrower paid loan once it has been submitted to them. we've had two loans nearly die because we were not able to reduce OUR commission to help the BORROWER cover closing costs. not sure if you all use them, but keep it in mind"