After a generally calm and generally positive day, MBS have traipsed lower in a similarly calm fashion.  We want to emphasize that even though the price levels have moved from being in positive territory all day to suddenly negative territory, there's nothing fundamentally driving the weakness.  It's possible that Treasuries are taking some cues from bouncing equities markets, but what's certain is that the bid-side for MBS has dried up.  Of the few remaining bids and asks, sellers outnumber by far, easily being forced to chase lower prices offered by the nowhere-to-be-found bid.

MBS Live: Pricing Snapshot
Open MBS Live Dashboard
FNMA 3.5
102-06 : -0-02
FNMA 4.0
104-16 : -0-01
FNMA 4.5
106-04 : +0-00
FNMA 5.0
107-28 : -0-01
GNMA 3.5
103-21 : -0-02
GNMA 4.0
106-30 : -0-01
GNMA 4.5
108-24 : -0-01
GNMA 5.0
110-17 : -0-01
FHLMC 3.5
101-31 : -0-02
FHLMC 4.0
104-08 : -0-01
FHLMC 4.5
105-28 : +0-00
FHLMC 5.0
107-20 : +0-01
Pricing as of 4:06 PM EST

Afternoon Market Updates
A recap of instant Reprice Alerts and Updates provided to MBS Live Subscribers.
3:16PM  :  NMLS: New Federal Registry Resource Center Coming April 2
On April 2, 2012 all information regarding federal registration will be moved out of the current NMLS Resource Center to a new site that is specific to the NMLS Federal Registry. This will include all Quick Guides, instructions and reference materials that pertain to Federal Registration. Starting April 2, the NMLS Federal Registry Resource Center will be available at: http://fedregistry.nationwidelicensingsystem.org.
3:11PM  :  ALERT: Illiquidity Starting to Drag Prices Down. Negative Reprice Risks...
Nothing too alarming going on here, but negative reprice risk is increasing slightly this afternoon as less liquid conditions after 3pm have sapped a modicum of demand for production MBS.

Although this sort of price action usually isn't indicative of the broader trends, lenders occasionally reprice late in the day because of it. Fannie 3.5's are only down to 102-08+ at the moment, but that's a decent enough clip from the 102-15+ highs to raise the alert level just a bit into the last two hours of the day.
3:05PM  :  Quick Comment On This Week's Fed Speeches
Ostensibly conflicting messages from Fed speakers... What's with that?! Mixed signals from the FOMC can cause volatility, and mortgage rates are not fans of volatility in underlying markets.

When Dallas Fed Pres Fisher (non-voter) says stuff like: "We will not support further quantitative easing under these circumstances because there's a lot of money lying on the sidelines, lying fallow," and "I don't see what more would do," you have to wonder if he's purposely trying to avoid tuning in to Bernanke's messages from earlier this week.

At the first George Washington University lecture, Bernanke gave a history lesson, citing the failures of the central bank in the 1930's that ultimately resulted in a major aftershock to the initial market crash preceding the Great Depression.

Bernanke said the Fed "did not use monetary policy to prevent deflation and the collapse in output and employment,” and “did not adequately perform its function as lender of last resort, allowing many bank failures and a resulting contraction in credit," concluding, "We will want to keep these lessons in mind as we consider the Fed’s response to the crisis of 2008-2009.”

In short, Bernanke doesn't necessarily disagree with the more hawkish Fed members on whether or not MORE QE is NEEDED (assuming economic metrics continue to hold or improve), but perhaps some of the more hawkish Fed members should do more to at least acknowledge that there's an argument to be careful about pulling back too quickly that goes beyond the simple question of whether or not the economy is improving.
2:38PM  :  FED - Fisher Sees No Need For More Monetary Easing
Although growth is "slower than we would like," Dallas Fed President Richard Fisher told Fox Business Network, "it's gaining momentum."

"We will not support further quantitative easing under these circumstances because there's a lot of money lying on the sidelines, lying fallow," he said according to a transcript provided by the network. "We don't need any more monetary morphine." "The real problem in our country is job creation and prosperity," he said. "And we need to get better fiscal policy to complement what we at the Fed have done, because it's not working as effectively as it should."

With rates near zero, pushing borrowing costs lower simply will not create more jobs, Fisher said.

"I don't see what more would do," Fisher said. "And I especially could not justify it if the economy continues to improve along the path which has been indicated recently."
2:35PM  :  FED - Bernanke Says US Economy Lacks Source of Demand
(Reuters) - U.S. consumer spending is still too weak to ensure a satisfactory rate of economic growth, Federal Reserve Chairman Ben Bernanke said on Thursday.

"Right now, in terms of debt and consumption, we're still way low relative to the pattern before the crisis," Bernanke told students in the second of two lectures at The George Washington University. "We lack a source of demand to keep the economy growing."
2:18PM  :  ALERT: MBS/TSYs Generally Holding a Range. Slightly Weaker Into PM Hours
Earlier in the day, 10yr yields tested a break below the mid 2.25's, but have since drifted calmly higher to sit at 2.2727 at the moment. Depending on which analytic method you fancy today, those "mid 2.25's" could either be viewed as resistance from the 200-day moving average (broken on 3/14 and confirmed on 3/15), or a return to a small band of yield from 2.26-2.29 that acted as a high volume pivot on the same days. Bottom line: things are calm...

MBS appreciated the stability, and did a slightly better job than 10's of holding their technical support at 102-10, which was yesterday afternoon's most frequent high, and has been support since 11am today. But we’ve just ticked to 102-09 for the first time today and that raises a concern for lenders who priced between 9:30and 9:45am eastern time, or any later sheets at 11am eastern time. MBS were at their highs at those times and are 4-6 ticks weaker at the moment. Negative reprice potential is slightly greater with a test of 102-10 among those lenders.

From a technical standpoint, we'd keep an eye on 102-10, which is where Fannie 3.5's currently trade. If we're there or above, we'd remain relatively unconcerned about negative reprice potential. The more we trade below, the greater the risks of negative reprice, but we’d also reiterate that the trading has just been incredibly calm today, and we haven’t seen anything too shocking or disturbing in the price action as far as it would speak to broader trends. Today has been very contained and surprisingly uneventful in the recent context.
11:00AM  :  ALERT: MBS Again Approaching Highs, Treasuries Try to Break Lower
It would seem that traders or algorithms (or both) are either cognizant of the 200-day moving average at 2.255 or at least have coincidentally traded it as resistance so far this morning. Just after 8am, just after 9:30, and just after 10:30, we have three noticeable bounces, followed by our first test lower heading into the 11am hour.

Just as we're hypothesizing about cognizance of that moving average, so too should we be cognizant of the impending completion of the Fed's scheduled Twist buying in the 2022-2030 maturity range as something that could cause a bit of volatility in coming minutes.

MBS are near their highs of the day with Fannie 3.5's up 7 ticks at 102-15. If the reaction to the Fed buying helps 10's break lower, we'd likely see MBS hit new highs.
Featured Market Discussion
A recap of the featured comments from the Live Chat feature on the MBS Live Dashboard.
Ira Selwin  :  "REPRICE: 3:56 PM - Franklin American Worse"
MC  :  "REPRICE: 3:38 PM - Provident Funding Worse"
Ross Miller  :  "REPRICE: 3:32 PM - NYCB Worse"
Mike Pennington  :  "REPRICE: 3:30 PM - Flagstar Worse"
Michael Tadros  :  "REPRICE: 3:28 PM - Interbank Worse"
Matthew Graham  :  "light volume in new MBS originations today, but 30yr Fannie/Freddie accounts for roughly half, and almost all of that has been in 3.5's. "
Ira Selwin  :  "Freddie as well: http://www.freddiemac.com/singlefamily/mortgages/docs/Updated_LTVs_superconforming.pdf"
Ira Selwin  :  "Fannie Mae is maxed out at 90"
Ira Selwin  :  "https://www.efanniemae.com/sf/refmaterials/eligibility/pdf/eligibilitymatrix.pdf"
Matt Devine  :  "are all lenders capped at 90% LTV on high balance conforming loans? anyone go up to 95%?"
Jason Adams  :  "LP caution- try reducing the term. I have had 2 I was able to save by reducing to 20 YR loan. "
MMNJ  :  "Tony = the Carnac of MND....:)"
Tony Cardinal  :  "there you have it."
Dirk Postupack  :  "yes.....all 3"
Tony Cardinal  :  "dirk, you have a co borrower? credit <700. i am finding that those are the 2 biggest culprits in obtaining a "caution.""
Dirk Postupack  :  "I have run 3 new loans thru freddie macs new program w/ ltv's all over 100 and all came back caution.....anyone else experiencing the same thing?"
Matthew Graham  :  "much lower volume now... very tame leak lower in price. only a concern inasmuch as some overly-dramatic price desk thinks it's a concern, but it's not a concern in anything other than the most narrow of time frames. "
Michael Gannon  :  "losing all the gains....is it light volume?"
Andrew Horowitz  :  "if you look at that chart consumers Expenditures were rising at 2% per year until 08, now in 2005 the figure was 6.3% in 2010 the figure dipped by 2%, with a slight recovery and population growth you should see 5% returns in CE once again"
Andrew Horowitz  :  "http://www.bls.gov/cex/2010/standard/multiyr.pdf"
Andrew Horowitz  :  "Actually with pop growth consumption should be back to pre bubble levels Brent"
Matthew Graham  :  "RTRS- BERNANKE SAYS U.S. CONSUMPTION STILL FAR BELOW PRE-CRISIS LEVELS, ECONOMY LACKS SOURCE OF DEMAND "
Brent Borcherding  :  "They've pumped in so much money that without it, you'd have to believe this anemic growth would be non-existent."
Matthew Graham  :  "pretty big "if" though, not to mention the question of "how much of the economic improvement is due to to easing, even if indirectly? or even the expectation that easing can be "counted on" in some way if things start to slide again?""
Jeff Statz  :  "Fisher stating what we know"
Matthew Graham  :  "indeed, if the economy continues to improve, it does get harder to justify further easing. "
Matthew Graham  :  "this wire seems more reasonable to me... "
Matthew Graham  :  "RTRS - FISHER SAYS 'COULD NOT JUSTIFY' FURTHER FED EASING IF ECONOMY CONTINUES TO IMPROVE ALONG CURRENT PATH "
Matthew Graham  :  "First of all Hodges, I don't know... Second of all, I think QE implies inflationary injection whereas Twist does not do this directly and sterilized QE also purports not to. Either way, I doubt Fisher is choosing words carefully enough to distinguish between the various stimulus options and is instead simply referring, in his usual extremely-over-hawkish tone (especially considering Ben's wise words on the topic of pulling back too soon this week), to any additional/new easing policy"
Matt Hodges  :  "sure, what does he consider Sanitized buying or Twist the same as QE?"
Matthew Graham  :  "(Fisher - non-voter)"
Matthew Graham  :  "RTRS - FED'S FISHER-WE WILL NOT SUPPORT FURTHER QUANTITATIVE EASING GIVEN IMPROVEMENT IN ECONOMY "
Matthew Graham  :  "I think Spain/Portugal are in a constant state of "looming" as threats..."
BVG  :  "Is Spain still a threat?"
Matthew Graham  :  "Charles, the break above the pivot in 10's making those "stability reprices" a bit less likely..."
Matthew Graham  :  "was just thinking about a "stability reprice" as a quasi-potential sort of thing"
Charles Beasley  :  "Any chance for a reprice for the better today?"
Matthew Graham  :  "but i try to stay away from thinking too much about stocks in terms of behaving in a technically logical way. I'm not good at it, in other words."
Matthew Graham  :  "In that regard, we're right on a pivot with 3/13 close but bigger deal would be late Feb through 3/9 pivot which generally caps out around 1375. (trading at 1386 right now)"
Matthew Graham  :  "well, I guess you must be talking about the Dow, but I don't even keep it on my screen. Everything stock-related that I read or consider is always based on S&P futures, which also show up as "spoos" depending on where you're looking."
Matthew Graham  :  "in the Dow?"
Brayden Alexander  :  "MG, how significant would a move below 13 k be?"
Matt Hodges  :  "i have to worry about my company's overlays though"
Justin Bayle  :  "MH if you get DURP findings, you may not need to worry about ratios"
Matt Hodges  :  "even so, dunno if u/w will accept a short period of time of lease payments"
Matt Hodges  :  "WF doesn't overlay if delegated u/w to correspondent; if they prior approval the loan, 2 years"
Timothy Baron  :  "I think the rental income is okay per Fannie, but you will probably find investor overlays requiring 2 yr landlord exp."
Victor Burek  :  "i agree...if not on returns, cant use...but others said they have been able to use rental with a lease agreement and canceled check..i cant though"
Jason Adams  :  "You will need 2 years rental history to count it. U/W will ask for tax returns to verify rental income has been reported "
Matthew Graham  :  "one big buy in the shortest duration offered, but decent mid-range offered by dealers and taken down by Fed. Pretty uneventful buyback. http://www.newyorkfed.org/markets/pomo/display/index.cfm"