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Coming into the day, we knew that Italian political headlines could be a risk as Italy's president said he would make an announcement. Just after headlines hit that President Napolitano is calling a meeting with Bersani (the guy he'd probably pick to give the "mandate to form a government" to), bond markets began selling off quickly and Italian credit spreads rocketed tighter.

Moments later, wires hit saying Cypriot lawmakers say a deal deal that adheres to the EU framework may be possible "within hours." Further rocketing ensured and 10yr yields are up 3bps in 12 minutes. MBS are holding their ground MUCH better but are well off their 102-29 highs at 102-24 at the moment. Lenders who priced early are rapidly approaching "reprice risk" territory.

More from MND:

• MBS Commentary: MBS RECAP: Technically an Early Close, but Buyers Never Showed Up
• Mortgage Rate Watch: Mortgage Rates Hold Steady Ahead of 3-Day Weekend
• 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

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