MBS Live: MBS Morning Market Summary
After opening in slightly weaker territory, MBS moved back into the green to the tune of 2-3 ticks in Fannie 3.0s and 3.5s.  This leaves MBS prices about mid-range to Friday's "post-rally" time frame.  There hasn't been much by way of news to move markets and there's been essentially no data.  Volume is light, but obviously so is volatility.  10yr yields are off their weakest levels of the morning, helped along by news that the important German court vote on Wednesday could be delayed, but under ongoing pressure from several sources including the corporate bond market as well as the auction cycle and the FOMC Announcement later in the week.
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
106-01 : +0-02
FNMA 4.0
107-04 : +0-00
FNMA 4.5
108-02 : -0-02
FNMA 5.0
109-11 : +0-01
GNMA 3.5
108-11 : +0-04
GNMA 4.0
109-21 : +0-01
GNMA 4.5
109-23 : -0-01
GNMA 5.0
110-18 : -0-01
FHLMC 3.5
105-27 : +0-03
FHLMC 4.0
106-27 : -0-01
FHLMC 4.5
107-13 : -0-02
FHLMC 5.0
108-09 : -0-02
Pricing as of 11:08 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.

9:54AM  :  One Of This Week's Big-Ticket Events Potentially Delayed
One of the two major considerations for bond markets this week is Wednesday's German Constitutional Court vote on the European Stability Mechanism, or ESM. The Telegraph is reporting (read more) that the vote may be delayed due to new concerns relating to last week's ECB Bond-Buying Announcement. A German Politician has argued that "the ECB move alters the situation and the court must now first decide whether the central bank's bond purchase programme is legal before it can rule on the constitutionality of the ESM rescue fund" according to the Telegraph.

In response, the court says they'll hold an emergency session to decide by Tuesday morning whether or not to postpone Wednesday's ruling. We don't have a read on how likely an actual postponement would be as a result of this challenge, but as silly as the idea seems, we'd imagine the court would simply say "no" to the lawmaker in question as opposed to holding an emergency meeting.
9:11AM  :  ALERT ISSUED: Bond Markets Mixed To Begin Week, Unencumbered By Data Today
Bond markets improved slightly during the Asian hours of the overnight session, but reversed those gains during European hours, ultimately sliding to slightly weaker levels than Friday's close between 8:20 and 8:40am New York time. Even now, 10yr yields remain in slightly negative territory whereas MBS are 1 tick in the green with Fannie 3.0s at 103-23.

There was little by way of significant market-moving news overnight, despite lots of "tidbits." Some of the more noteworthy news items since Friday include several takes on Greece's creditors asking for clarification on austerity measures with the WSJ going so far as to say parts of the austerity plan are "rejected." Italy's prime minister says no to additional conditions attached to ECB bond-buying according to Reuters and The UK Telegraph echos the sentiment saying that the strict terms for Italy and Spain threaten the bond-buying plan.

Generally speaking though, none of the overnight events elicited a major reaction in terms of volume or price action with the long end of the yield curve simply selling off since about 3am and recently moving sideways as we wait for the domestic stock market open. There's nothing on tap data-wise this morning, though Consumer Credit hits at 3pm Eastern.

On a housekeeping note, tomorrow is "Notification Day" for Fannie and Freddie 30yr MBS. As such, prices will "drop" at the close tomorrow as we change from viewing September coupons to October.
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.

Jeff Anderson  :  "Right. At some point when the Fed decides to get out of buying everyone elses exit would be pretty swift, IMO. Although all the bond bears have been saying the same about treasuries since 2009, right?"
Matthew Graham  :  "a while back, when we first started discussing MBS' potential inclusion in another round of QE, AQ said he hoped we did NOT get that and this is why. MBS-related QE not only prolongs the life-support, but also attempts to force the issue of lower rates when markets won't readily be forced into lower rates. "
Matthew Graham  :  "at this point, unfortunately, that's where the bottleneck is... as opposed to "MBS not having enough demand""
Matthew Graham  :  "there's only whatever coupon that lender capacity and borrower demand justify"
Jeff Anderson  :  "Say the Fed wants to really try and lower rates and buys heavy, are we talking a 2.5 coupon? Is there one? I know, I don't want to start the 2.5 questions, but does buying the 3.0 get us to a level that helps things enought to get construction/real estate market moving enough to get the GDP moving in a better manner?"
Matthew Graham  :  "yeah 2:15 presser, 12:30 announcement, 2:00pm projections"
Matt Hodges  :  "MG - assume presser at 2:15 on Thursday? not on econ calendar"
Matthew Graham  :  "and re: 10bps, AQ raises a good point in that 10bps doesn't necessarily equal 10bps depending on the lender"
Matthew Graham  :  "she also said she's concerned about inflation, so credibility is shot with me."
Matt Hodges  :  "Sheila Bair said this AM it's a done deal on QE"
Jeff Anderson  :  "On another topic, only heard a few conversations this weekend, but both said that they thought the only real play the Fed had this week was to buy MBS' to force rates lower while neither person saying that said they wanted the Fed to act in any manner. Thoughts?"
Adam Quinones  :  "the translation into $price (bp) is based on the multiple at which the GSEs give to each lender"
Adam Quinones  :  "the 10bp gfee hike is to rate...in the form of coupon strip."
Jeff Anderson  :  "Makes more sense. Not sure why I had it in my head it was 10 bps to pricing. Bigger deal with it hitting rate. Great. Ugh."
Jeff Anderson  :  "So the Gfee is a rate adjustment, not a pricing hit. Ok. Thanks."
Matt Hodges  :  "= .5 to cost"
Victor Burek  :  "the bps is too rate"
Matt Hodges  :  ".1 to rate"
Jeff Anderson  :  "GM, all. Pats may have a running game. Can someone explain to me, in layman's terms as it is me asking, how the 10 bps Gfee increase is affecting rate sheets by 50 or more bps to pricing?"
Matthew Graham  :  "Ever had the experience of something suddenly becoming less serious or scary when you learned a new key piece of info about it? I'm tempted to be less concerned with Wednesday's German court vote after seeing their hats. http://i.telegraph.co.uk/multimedia/archive/02255/german-court-Bunde_2255425c.jpg"

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