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Bond markets continue to follow stocks and stocks continue to follow Fiscal Cliff headlines. The most recent headlines from Bloomberg indicate that Senate Majority leader Reid is "hopeful" for a Fiscal Cliff deal today.

10yr yields hit their highs of the morning at 1.7426 and MBS hit their lows with Fannie 3.0s returning to 104-21 before bouncing back to 104-24.

Today will be an important one to "know thy lender," as reprice likelihoods are just as much an exercise is psychoanalysis as they are about observing MBS price movements. Based purely on MBS prices, we're probably not at much risk for the few lenders who are out with rates already, but some lenders switch to a defensive stance and reprice negatively simply on volatility and trends.

More from MND:

• MBS Commentary: MBS MID-DAY: Negative Reprices in the AM: Breakfast of Champions
• MND NewsWire: Delinquency Rate Hits Post Housing Crisis Low for Freddie Mac
• Pipeline Press: Government Furlough Days; H.R. 1077's Impact on QM And 3% Limit; MBA on GSE risk sharing
• MBS Commentary: The Day Ahead: Do or Die Time for MBS
• MBS Commentary: MBS RECAP: Attempting To Consolidate After Wednesday's Sell-Off

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