MBS Live: MBS Morning Market Summary
Little to say here apart from the fact that bond markets can't catch a break.  MBS and Treasuries BOTH tried to make it through their respective technical resistance levels of 104-18 in Fannie 3.0s and 1.783 in 10yr Yields, but both bounced and headed back to their weakest levels of the day.  The only consolation is that they haven't stampeded straight through into decisively negative territory, instead sort of holding within a tick or two of unchanged.  Several lenders have repriced for the worse, and more negative reprices are possible with MBS near 104-09.
MBS Pricing Snapshot
Pricing shown below is delayed, please note the timestamp at the bottom. Real time pricing is available via MBS Live.
FNMA 3.0
104-10 : -0-01
FNMA 3.5
106-01 : -0-01
FNMA 4.0
106-29 : +0-00
FNMA 4.5
107-26 : +0-01
GNMA 3.0
105-25 : -0-02
GNMA 3.5
108-08 : -0-01
GNMA 4.0
109-03 : -0-01
GNMA 4.5
108-21 : -0-04
104-05 : +0-01
105-26 : +0-01
106-17 : +0-01
107-03 : +0-00
Pricing as of 11:09 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.

10:17AM  :  ECON: Philly Fed Index Higher Than Expected On Prices, Employment Falls
Firms responding to the October Business Outlook Survey reported a modest improvement in business activity this month. The survey’s indicators for general activity returned to positive territory, while new orders and shipments recorded levels near zero. But firms reported continuing declines in employment and hours worked. Indicators for the firms’ expectations over the next six months remained positive.

The survey’s broadest measure of manufacturing conditions, the diffusion index of current activity, increased 8 points, to 5.7, marking the first positive reading since April (see Chart). A little over 28 percent of firms reported increases in activity this month, up from 21 percent last month. The demand for manufactured goods, as measured by the current new orders index, decreased 2 points, to -0.6. Shipments rebounded from last month but were roughly flat this month. The current shipments index increased 21 points, to -0.2; inventories were near steady; and firms reported continued declines in unfilled orders and shorter delivery times.

Labor market conditions at the reporting firms remained weak this month. The current employment index dipped 3 points, to -10.7, its lowest reading since September 2009. Twice as many firms reported decreases in employment (22 percent) as reported increases (11 percent). Firms also indicated fewer hours worked: The average workweek index, at -7.6, was negative for the seventh consecutive month.

More firms reported paying higher prices for inputs, and the prices received for manufactured goods rose modestly this month. The prices paid index increased from 8 last month to 19 in October, with 30 percent of the firms reporting input price increases. With respect to their own manufactured goods, the percentage reporting an increase in prices (19 percent) was greater than the percentage reporting a decrease (14 percent). The prices received index rose to 5.4 from -0.2.
9:35AM  :  ALERT ISSUED: Bond Markets Holding Ground In Slightly Better Territory
Overnight trading in US Treasuries and S&P futures--our two respective proxies for the broader bond and stock markets during, especially during nocturnal hours--both traded clearly delineated technical ceilings overnight.

10's ground up against the mid 1.82's, which is also the 200-day moving average. S&P futures bumped their heads incessantly on the 1457 to 1458 mark.

The levels aren't necessarily as important here as the fact that the broader undertones of "risk" have finally gone sideways in decent volume as opposed to stampeding relentlessly in a "risk-on" direction. Further to the point of not focusing too much on levels, the moving average in TSYs and the big potential "triple top" in stocks don't necessarily mean that such levels will be hard and fast lines that cannot be crossed.

Indeed, the last two times that 10's approached the 200 day MA, it either fell short or broke through, but rarely ever bounces perfectly on the line itself--more of a broad indicator. The point is not to get too caught up in making conclusions based on today's trading levels with the benefit of some additional hindsight.

For now, things are off to a relatively pleasant start for bond markets and MBS. 10's are down to 1.7974 and Fannie 3.0s are up 5 ticks to 104-15. Higher than expected Jobless Claims helped facilitate the overnight bounce already in the works, but the 10am Philly Fed data also needs to be fairly friendly if we're to maintain the current level of equanimity.
8:40AM  :  ECON: Jobless Claims Higher Than Expected
- 388k vs 365k Consensus
- No specific mention of which state caused last week's underreporting issue, but this mornings number makes last week's number look like the outlier as opposed to an indication of a break from the stagnant, sideways trend.

From the DOL:
In the week ending October 13, the advance figure for seasonally adjusted initial claims was 388,000, an increase of 46,000 from the previous week's revised figure of 342,000. The 4-week moving average was 365,500, an increase of 750 from the previous week's revised average of 364,750.

The advance seasonally adjusted insured unemployment rate was 2.5 percent for the week ending October 6, a decrease of 0.1 percentage point from the prior week's unrevised rate. The advance number for seasonally adjusted insured unemployment during the week ending October 6 was 3,252,000, a decrease of 29,000 from the preceding week's revised level of 3,281,000. The 4-week moving average was 3,275,500, a decrease of 5,750 from the preceding week's revised average of 3,281,250.
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.

Matthew Graham  :  "to clarify one of the Philly Fed snippets, Employment component was down 10.7 as in "-10.7" vs a previous "-7.3." In other words, it got worse."
Brayden Alexander  :  "mg, good call on the reversal"
Matthew Graham  :  "Employment lowest since Sept 2009"
John Rodgers  :  "Headline beats but the devil is in the details. "
Matthew Graham  :  "Prices Paid +19.0 vs +8.0 last time"
Matthew Graham  :  "Employment down 10.7 vs - 7.3 last time"
Matthew Graham  :  "New orders -0.5 vs +1.0 last time"
Matthew Graham  :  "Philly Fed 6 Month Conditions 21.6 vs 41.2 last time"
Gus Floropoulos  :  "love the charts funtion, allows me to show clients and LO's patterns and trends over short and long time frames"
Matthew Graham  :  "this is about to reverse when they realize that the report is way worse, but that prices paid drove the change"
Victor Burek  :  "we still have a couple reports coming"
Scott Davis  :  "gm all, more green coming today? Thoughts?"
Jeff Anderson  :  "GM, all. Green is good.Sounds like Merkel and France aren't getting along again. "
Matthew Graham  :  "RTRS- US JOBLESS CLAIMS 4-WK AVG ROSE TO 365,500 OCT 13 WEEK FROM 364,750 PRIOR WEEK (PREVIOUS 364,000) "
Matthew Graham  :  "RTRS - US JOBLESS CLAIMS ROSE TO 388,000 OCT 13 WEEK (CONSENSUS 365,000) FROM 342,000 PRIOR WEEK (PREVIOUS 339,000) "
William Hansen  :  "Here we go again. Another day where nothing makes sense!"
Oliver S. Orlicki  :  "Green? Nice start so far"

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