MBS Live: MBS Afternoon Market Summary
Today was really more of an extension of the previous week than the beginning of a new one.  Scheduled events were almost completely absent.  Volume was light, and the ranges were narrow.  But unlike last week, this one begins with a market showing it's willingness to deviate from recently held ranges with both MBS and Treasuries breaking to their best levels since late February.  Although the pace of events picks up noticeably tomorrow, we're still waiting for Wednesday's FOMC festivities as the first "big deal" since early April.  Today was/is a great way to start a potentially volatile week though...  with rates as good as they've been in the past few months and near all time lows.
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
103-24 : +0-05
FNMA 4.0
105-21 : +0-03
FNMA 4.5
106-32 : +0-02
FNMA 5.0
108-18 : +0-02
GNMA 3.5
105-09 : +0-05
GNMA 4.0
108-04 : +0-03
GNMA 4.5
109-14 : +0-02
GNMA 5.0
110-26 : +0-01
103-16 : +0-05
105-09 : +0-03
106-16 : +0-02
108-01 : +0-01
Pricing as of 4:06 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.

2:42PM  :  MBS Outperforming, But Dragged Down By Treasuries
After the earlier correction took MBS and Treasuries alike to their weakest levels of the day, both spent the past hour back near the center of the day's trading range. For 10's that was in the mid 1.92's and for Fannie 3.5 MBS, around 103-24.

But Treasuries have weakened into this afternoon's stock market bounce back. S&P's put in a convincing bounce around half an hour ago and are since up a quick 4 points. 10yr yields followed and recently revisited their highs of the day.

Conversely, MBS are definitely not at their lows of the day, signifying some relative outperformance vs Treasuries. The reprice outlook is fairly neutral at the moment. We take heart in the outpeformance and narrow range, but remain guarded against "things changing" in such a way that leaves Fannie 3.5 MBS under 103-22.

Whatever the case, any movements outside today's range would need to be accompanied by a sizable pick-up in volume. The day has been thinly traded and mostly apathetic so far.
12:35PM  :  ALERT ISSUED: MBS Seek Sideways Support After Minor Correction
MBS and Treasuries are both trading sideways at their weakest levels of the day. With a range of 103-21 to 103-27 for MBS and 1.91-1.93 for 10yr Treasuries, that's not saying much. Still... a break past current support would constitute enough weakness for a shift in reprice risk. This is more of a preemptive heads-up that we're on the edge of a riskier price zone. The "early" lenders could get involved just under current levels.

If we do see negative reprices, we'd emphasize that there are no major underlying causes for market weakness. They'd be more incidental, having little, if any broader implications. What we've essentially seen is bond markets get long into Fed buying, and correct back to previous levels afterward. The stock rebound is a small consideration as well, considering the lack of trading motivations, as are the various European closing bells that have recently taken some wind from the sails of Treasuries.

MBS are merely along for the ride though they stand a good chance to sell-off at a milder pace than Treasuries (if the latter even sells-off at all). In the slightly bigger picture, bond markets could weaken a bit here and we'd be OK with it. Such a move would be another piece of confirmation that bond markets are rallying in the bigger picture. We can appreciate that seems counter-intuitive, but the reason is that selling pressure here keeps the PACE of the recent rally WITHIN linear boundaries whereas further rallying would be a concern as it would refute the recent trend, creating uncertainty about what's been happening (in a technical sense) and where we might be headed.
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.

Andy Pada  :  "Just talked with Freddie. Pricing system has been down all day. will be up around 3:30"
Matthew Graham  :  "Good to know. Seemed like there was some discussion about additional changes this most recent weekend. Just trying to clear up and/or confirm if it was just the one weekend or two. JZ's comment below seems to suggest that something changed this most recent weekend as well (as does the LP "weirdness" )"
Jason Adams  :  "The cautions were prior to last monday when the changes wer suppose to have been made. My office in general has been able to save about 30% of deals since last MOnday"
Jason Adams  :  "Today Freddie LP has been giving some strange errors in files. I am wondering if they are down or having issues"
Jason Adams  :  "I have ran 4 LP caution loans and was able to get accepts on 3 of them. "
Andy Pada  :  "anyone having issues with Freddie Mac cash window?"
Brett Boyke  :  "Charles - 1-877-700-4622 Option 9 then: Option 3-Products; Option 4- Underwriting Status; and Option 5-General U/W"
Jason York  :  "i recently got a better HVE value, which took the loan from 110% + to just under 105%"
Alan Craft  :  "I've been avoiding Freddie. Will take aonther look"
Matthew Graham  :  "great info JZ. Anyone else see something similar between last week and this week?"
Jason Zimmer  :  "FYI...we've heard that LP is loosing the HARP 2.0 guides and we just ran a loan that was caution last week and without doing anything to the loan we got accept today."
Charles Beasley  :  "Anyone have contact info for a GMAC correspondent rep so I can find out if they will allow for a 2075 appriasal?"
Matthew Graham  :  "I think we'd have to go back to late Feb to see similar levels. "
Thomas Quann  :  "back baby! Nice to see 10 year that low...."
Jeff Anderson  :  "Ha. Almost threw out a 3.0 comment for kicks this AM. But like the Capitals should have been told....don't poke the Bear!"
Matthew Graham  :  "both wilborn. great questions, great thoughts."
Jason Wilborn  :  "or is it a function of a wacked out market not sure about looking a 3.0 coupon in the face"
Matthew Graham  :  "But again, just like we left off last time, trade desk reports on volume, etc..., will be a less authoritative source than what you're actually seeing on rate sheets. If rate sheets are such that sub 3.75% rates seem prevalent, then you know 3.0's are on the rise."
Jason Wilborn  :  "is it a function of rate sheets and therefore production?"
Matthew Graham  :  "I hear ya. It's an unfortunate paradigm, and one that I shared for many years. "
Matthew Graham  :  "production has been split about 75/25 between 3.5's and 4.0's. "
Jason Wilborn  :  "when we see something trade at almost 101 - we wonder about liquiditiy MG"
Raul Lopez  :  "So... Hows the volume on the 3.0 coupons today?"
Chris Kopec  :  "I had this situation come up with a client of mine last month, and we got it handled."
Chris Kopec  :  "Scott.....make sure your client goes directly to an IRS office with their IRS 1040X....this can be handled same-day."
Scott Valins  :  "morning everyone...does anyone know if the IRS takes just as long to post amended 2010 returns as they do to post 2011 returns?"

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