MBS Live: MBS Morning Market Summary
"You shall not pass!"  Resistance levels in bond markets joined the ranks of Gandalf and The Black Knight in uttering this phrase after last night's Spain Downgrade and this morning's GDP data.  The "bridge" that bond markets are currently having a hard time crossing is the one that takes 10yr yields much below 1.94 or Fannie 3.5's much above 103-23, though there have been "attempts" to be sure (case in point: 10yr yields at 1.88+ overnight and into the high 1.92's this morning after GDP).  The counterpoint is that there's potential support on the other side of that equation.  For 10's, 1.96 could develop into a supportive ceiling, and for MBS 103-18-ish as a supportive floor.  Given that we're approaching the PM hours on a Friday, the confirmation of such decisions likely awaits next week's data and events, among which NFP stands out as the 'big deal' a week from today.
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
103-21 : -0-01
FNMA 4.0
105-21 : -0-01
FNMA 4.5
106-32 : -0-01
FNMA 5.0
108-18 : -0-02
GNMA 3.5
105-05 : -0-02
GNMA 4.0
108-00 : -0-02
GNMA 4.5
109-09 : -0-02
GNMA 5.0
110-20 : -0-02
103-15 : +0-00
105-10 : -0-01
106-17 : -0-01
108-01 : -0-01
Pricing as of 11:07 AM EST
Morning 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 morning.

9:55am  :  ECON: Consumer Sentiment Slightly Higher Than Expected
- 'Consumer Sentiment' 76.4 (highest since Feb'11) vs 75.7 consensus
- 'Current Conditions' 82.9 vs 81.0 consensus
- 'Expectations" 72.3 vs 72.5 consensus
- '12 mo. Outlook' 87 vs 87 consensus
- '1 yr Inflation Expectations' 3.2 pct vs 3.4 pct consensus
- '5 yr Inflation Expectations' 2.9 pct vs 3.0 pct consensus
9:33AM  :  ALERT ISSUED: Bond Markets Weakening After Initial Post-GDP Rally
"Rally and Fade..." That has been the default response in bond markets to the two most recent pieces of market moving data. Beginning in the overnight session, 10yr yields rallied into the 1.8's on two notch S&P downgrade of Spain only to bounce back to open domestically around 1.94%.

The next instance of "rally and fade" follows this morning's slightly weaker-than-expected GDP result. This one is a bit less extreme as 10's only made it into the high 1.92's before turning around, currently in the 1.95's.

MBS have been in a very narrow range for two days and thus far are drawing on support from yesterday afternoon's lows at 103-18. They'd been as high as 103-22 this morning (Fannie 3.5's). Truth be told, we'd rather get this weakness out of the way before rather get this weakness out of the day before rate sheets hit en masse, and hope for a lift after Consumer Sentiment at 9:55am. It looks like bond markets are delaying their final verdict until after that data.

Even then, their verdict has increasingly been "sideways." Even after the FOMC data on Wednesday that stood the best chance to change that sideways mentality, and even after this morning's GDP offered the next best opportunity for a directional break, we're STILL seeing more sideways motivation (i.e. things started to rally, but corrected back to the range) than anything. So the aforementioned "verdict" could simply be "more sideways." We're wondering if this won't continue to be the case to some extent, all the way until next Friday's NFP.
8:34AM  :  ECON: GDP +2.2 pct Versus +2.5 pct Consensus
Real gross domestic product -- the output of goods and services produced by labor and property located in the United States -- increased at an annual rate of 2.2 percent in the first quarter of 2012 (that is, from the fourth quarter to the first quarter), according to the "advance" estimate released by the Bureau of Economic Analysis. In the fourth quarter of 2011, real GDP increased 3.0 percent.

The Bureau emphasized that the first-quarter advance estimate released today is based on source data that are incomplete or subject to further revision by the source agency (see the box on page 3). The "second" estimate for the first quarter, based on more complete data, will be released on May 31, 2012.

The increase in real GDP in the first quarter primarily reflected positive contributions from personal consumption expenditures (PCE), exports, private inventory investment, and residential fixed investment that were partly offset by negative contributions from federal government spending, nonresidential fixed investment, and state and local government spending. Imports, which are a subtraction in the calculation of GDP, increased.

The deceleration in real GDP in the first quarter primarily reflected a deceleration in private inventory investment and a downturn in nonresidential fixed investment that were partly offset by accelerations in PCE and in exports.
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.

john murphy  :  "sorry for doubling up on that one; it's a rather obscure clause in Reg Z, buried deep."
john murphy  :  "(3) Consumer's waiver of waiting period before consummation. If the consumer determines that the extension of credit is needed to meet a bona fide personal financial emergency, the consumer may modify or waive the seven-business-day waiting period or the three-business-day waiting period required by paragraph (a)(2) of this section, after receiving the disclosures required by § 226.18. To modify or waive a waiting period, the consumer shall give the creditor a dated written statement that descr"
john murphy  :  "JR: The 3 or 7 day waiting periods may only be waived if it is a bona-fide emegency. written/signed by all borrowers. Investor may think otherwise, but i think yuove got a clear exception here that is documentable."
John Rodgers  :  "Problem is that Saturday doesn't count per RESPA so they can't close till Monday. Wife is prego and wants to have a "home birth". Can the borrower sign a waiver and close today?"
Aaron Buyside Meyer  :  "can close on the 8th day"
Aaron Buyside Meyer  :  "7 days is correct JR"
Jason York  :  "i think that is from initial disclosure to closing, there has to be 7 days"
John Rodgers  :  "What about the 7 day rule, isn't it different? "
Paul L. Martin  :  "JR- depends on changes to TIL and initial disclosures...if you disclosed back on the 19th, then made changes, then you can go to a 3 day if the borrower signs receipt of redisclosures. "
John Rodgers  :  "So I got a VA loan from 53rd because they totally botched the deal it was supposed to close last Friday. The borrower has been under contract since mid-February. I got the deal on 4/19 and believe it or not I was able to get a closing package out yesterday to close today. When my compliance person ran our preclose analyzer we discovered that we have not met the 7 day RESPA rule for closing. We're checking with our investor to see if they'll take a waiver. Has anyone else ran into this issue?"
Brent Borcherding  :  "There was an article on CNN Money touting tbe benefits of the 7/1."
Christopher Stevens  :  "our 7/1 volume is low as our avg ln amt in our area is only $140,000 but with the rate below 3% you can't beat it"
Andy Pada  :  "Interestingly enough, we never do 7/1 ARMs and we just locked in a few this week."
Ira Selwin  :  "We just had a bunch come over, more than usual this week."
Adam Quinones  :  "how much volume?"
Ira Selwin  :  "Interesting CS, I saw a bunch come over as well."
Christopher Stevens  :  "saw a lot of 7/1ARm locked this week out of my office"
Adam Quinones  :  "we're not far from yesterdays "going out" marks"
Adam Quinones  :  "traders stayin squared-up..no one wants to adjust their positions too much on a Friday."
Mike Drews  :  "i go get coffee and now we're red?..huh?"
Ira Selwin  :  "Piggybacking off Metlife offically stopping Reverse mortgages, Genworth sent an email stating how the were committed to the Reverse Mortgage Industry"
Matt Hodges  :  "agreed; it's a friday"
Victor Burek  :  "i'll take sideways at this level all day"
Matthew Graham  :  "this is lame... The volume is there but markets having a hard time deciding what to think about anything and everything these days"
Matthew Graham  :  "RTRS - US Q1 BUSINESS INVENTORY CHANGE +$69.5 BLN, LARGEST RISE SINCE Q3 2010, (Q4 +$52.2 BLN) "
Matthew Graham  :  "RTRS - US Q1 CONSUMER SPENDING +2.9 PCT (Q4 +2.1 PCT), DURABLES +15.3 PCT (Q4 +16.1 PCT) "
Matthew Graham  :  "RTRS - US Q1 GDP +2.2 PCT (CONSENSUS +2.5 PCT), Q4 +3.0 PCT; FINAL SALES +1.6 PCT (CONS +2.1 PCT), Q4 +1.1 PCT "

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