MBS Live: MBS Afternoon Market Summary
MBS and Treasuries have both been eerily quiet today when viewed against the backdrop of yesterday's range.  Look at today only and things have still been pretty darn stable with Treasuries rallying from roughly 2.26 to 2.23, putting in some decent supportive bounces along the way, and Fannie 3.5 MBS rallying from 102-08 to 102-19.  We're still getting the impression that markets don't quite know what to do with themselves after yesterday's rout--almost as if they've shown up the NFP party too early and are waiting for the music to start before they move decidedly in one direction or another. 
MBS Pricing Snapshot
Pricing shown below is delayed, please note the timestamp at the bottom. Real time pricing is available via MBS Live.
FNMA 3.5
102-19 : +0-15
FNMA 4.0
104-25 : +0-10
FNMA 4.5
106-10 : +0-05
FNMA 5.0
107-32 : +0-04
GNMA 3.5
104-07 : +0-17
GNMA 4.0
107-13 : +0-11
GNMA 4.5
108-26 : +0-06
GNMA 5.0
110-14 : +0-02
102-11 : +0-15
104-15 : +0-09
105-30 : +0-04
107-20 : +0-03
Pricing as of 4:09 PM EST
Afternoon Reprice Alerts and Updates
Below is a recap of instant Reprice Alerts and updates issued via email and text alert to MBS Live subscribers this afternoon.

1:02PM  :  ALERT ISSUED: MBS Improve, Taking Cues From TSYs, Positive Reprice Potential
In recent minutes, 10yr yields managed to creep just slightly below their previous floor of resistance around 2.238. At the same time, Fannie 3.5 MBS rose to challenge a ceiling marked by a band of prices from 102-16 to 102-19. They're currently in the middle of that zone and have yet to move over 102-19.

When they do, if they do, we'd expect positive reprice potential to increase. Even so, we do already have one report of a positive reprice from one of the usual suspects among the "early crowd." More would probably follow suite above 102-19.

When the game is afoot, so to speak, as far as bigger, broader movements in bond markets, it's not uncommon for MBS to sit back and merely do their best to pace Treasury movements. As such, we're thinking we'd like to see a break below 2.23% in 10yr yields as a rough approximation of the likelihood for MBS to break the 102-19 pivot. If things move in the other direction, we'd now hope for 102-16 as support, and will assess from there if that happens.
12:09PM  :  NY Fed: 2011 Domestic Open Market Operations Released
The MBS holdings in the SOMA declined from a balance of $992 billion at the end of 2010 to $871 billion at the end of September 2011, reflecting the effects of principal payments. Principal payments led to especially large declines in holdings of MBS with 4.5 percent and 5 percent coupons, purchased in 2009 and 2010.

From October through the end of 2011, the Desk reinvested $77 billion of principal payments on agency debt and MBS into MBS, leaving total MBS holdings at $874 billion at year-end. Reinvestment purchases in the final quarter of the year were concentrated in recently originated 30-year fixed-rate MBS with coupons of 3.5 percent and 4.0 percent...
11:47AM  :  Indecisive, Sideways Price Action Despite Heavy Volume
Volume is THICK. We really can't emphasize this enough--that tradeflows have been a steady 2-way push and pull since before the domestic session even began. 10yr Futures Contracts have almost broken over 1 million units already, which is about the average we'd see by 5pm most days.

For their part, MBS have held quite steady just under the band of resistance from 102-16-102-19. Fannie 3.5's are currently up 10 ticks on the day at 102-14. But MBS can't do much in the current environment besides keep an eye on broader market movements and adjust accordingly.

To that end, there's the ostensible battle in 10yr yields. Either it really is a battle or simply a determination to not make any major moves ahead of Friday's NFP. There are trading motivations on both sides of the fence and we get the impression that folks aren't exactly sure how to pass the time between now and Friday.

It seems like the overnight session in addition to this morning's trade shows a strong enough level of buying interest at higher yields (and "Real" money too! not much short-covering), but conversely, the resistance floor just under 2.24 is crystal clear in 10yr yields so far today. MBS are probably going to need a test of that level in 10's if they're going to break over 102-19 in Fannie 3.5's, but Thelma and Louise could still manage a soft landing if 2.27-ish holds on the high side for 10yr yields.

For the record, we're thinking about a "soft landing" support level in Fannie 3.5 MBS as being something around 102-13, which seems to have seen some pivot activity earlier this morning. That makes a break below 102-12 a good level to start thinking about reprice risk (if we see such a break).
Live Chat Featured Comments
A recap of the featured comments from the MBS Live dashboard's Live Chat feature, utilized by hundreds of industry professionals each day.

Ray Pearsall  :  "REPRICE: 4:02 PM - Franklin American Better"
Victor Burek  :  "REPRICE: 3:58 PM - Nexbank Better"
Matt Hodges  :  "bingo, matt"
Matt Sullivan  :  "maybe you guys can help me clear something up...lets say you run LP with a value of 200K and the HVE comes back at 175...and its requires an appraisal....do you then re-run it at the 175 number in hopes of a PIW?"
Andrew Russell  :  "Lion, I believe Freddie allows it but also takes into account the ratio of just the borrower as well"
Ken Crute  :  "maybe current servicer JR "
Tony Cardinal  :  "harp, maybe, investor, doubtful"
Joe Ridings  :  "HARP 2.0 question. i have a self employed borrower who sold business and started new unrelated SE business last year. no way to do loan that i am aware of. will harp take that?"
Matt Hodges  :  "it's instantly assigned DK"
Ray Pearsall  :  "assigned prior to 4/9 and it usually takes about 15 minutes. the last time there was one of these, they took about 2 hours."
Daniel Kramer  :  "for the 4/9 deadline for new FHA fees, does the case number have to be assigned prior to 4/9 or requested? how long does it usually take to get a case number back, once requetsed?"
Lion  :  "Does Freddie allow combining income for owner occupany and non-occupying co-borrowers when putting 20% or more down? Or does the owner occupant have to meet DTI requriements?"
Paul Mignone  :  "Matt Flagstar will accept HVE value on LP Relief "
Tony Cardinal  :  "sully you gotta use the HVE value so long as Freddie uses medium or high confidence level"
Matt Sullivan  :  "I cant get a PIW on LP to save my life"
Grant R. Menard  :  "YEs"
Matt Sullivan  :  "Grant did you get a PIW on the freddie one?"
Grant R. Menard  :  "gratz Dan. many more to come. got a freddie done at 148% the other day :)"
Daniel Kramer  :  "got my first Du Refi Plus approval with ath an apprisal waiver, 99 LTV/106 cltv"
Matthew Graham  :  "yeah, I was only able to detect barely enough to log a 0.01% improvement averaged across multiple lenders today. Volatility = not good for pricing"
Bryan LaFlamme  :  "Our rates, this morning, are actually worse than yesterday's reprices by about 1/8th..."
Matthew Graham  :  "102-24 was resistance on Friday"
Matthew Graham  :  "last friday dipped below 102-18 a few times but that was generally the support level"
Andy Pada  :  "How off are we from last Friday's pricing?"
Tom Schwab  :  "REPRICE: 2:13 PM - USBank Better"
BVG  :  "REPRICE: 1:47 PM - Interbank Better"
Brett Boyke  :  "CNBC - NY Fed Exploring a Sale of Some Assets Due to Improved Market Conditions "
MMNJ  :  "REPRICE: 12:52 PM - Provident Funding Better"
Kent Mikkola #353976  :  "http://portal.hud.gov/hudportal/documents/huddoc?id=12-04ml.pdf"
Matt Hodges  :  "see ML 12-4"
Matt Hodges  :  "417,000-625,500 go up on 6/11"
Matt Hodges  :  "UFMIP & Annual go up on 4/9"
Tom Bartlett  :  "you could be right Gus. I skimmed quickly and did see a June date as well. thx for clarifying."
Gus Floropoulos  :  "i thought ufmip wasnt til june"
Tom Bartlett  :  "UFMIP going up .75% and MMI up anoter .10..yikes!"
Tom Bartlett  :  "FYI-Friday is the last day before FHA raises fees on registered file starting Monday."

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