MBS Live: MBS Afternoon Market Summary

As has been the case so often since the onset of the Eurozone crisis, the tenor in domestic bond markets was largely a byproduct of European events in the overnight session.  The biggest news and biggest swings were actually seen before the European session began owing to early comments from Germany's Schaeuble that Eurozone Finance Ministers had not yet reached a decision on disbursement terms for the next tranche of Greek bailout money.  Stocks sold off and bond markets did a less emotional version of that "risk-off" trade.  Europe walked in the door to the big equities sell-off (and minor bond rally) and began "remembering" that can-kicking on Greek deadlines is par for the course and progressively unwound the panicked knee-jerk response to the news that might as well have been expected.   Bond markets got right back on the sell-off train that they've been riding all week, but thanks to the overnight rally and yesterday's late weakness, the day-over-day losses are minimal.  Data was completely overlooked and tradeflows dominated the price movement.  New origination in MBS was high, yet prices held up OK vs benchmarks, suggesting that mortgages continue to bounce back from last week's disconcerting bout of widening.
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
104-19 : -0-04
FNMA 3.5
106-09 : -0-02
FNMA 4.0
106-26 : -0-03
FNMA 4.5
107-18 : -0-01
GNMA 3.0
106-02 : -0-03
GNMA 3.5
108-10 : -0-01
GNMA 4.0
109-02 : -0-03
GNMA 4.5
108-22 : +0-00
104-08 : -0-04
105-30 : -0-02
106-09 : -0-04
106-28 : -0-02
Pricing as of 4:05 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.

3:03PM  :  ALERT ISSUED: Limited Activity; MBS At Lows; Stubborn But Low Reprice Risk
Again, just a heads up for those of you who may not be glued to the charts at the moment... Fannie 3.0s have been in a tight range all day, but are once again pushing the low end of that range. It's not enough of a gap from rate sheet time to justify negative reprices, but we would say they're altogether out of the question (as one lender likes to remind us on uneventful afternoons ahead of non-market days).

Other lenders have occasionally been known to execute similar "pipeline control" reprices, and we've heard anecdotally that new originations were higher this morning, so even if prices fall no farther, you still might keep an eye out for those types of reprices if you have deals with a lender that has a history of such things.

As for price-based reprices, Fannie 3.0s are at 104-18, not an unfamiliar level for them today and one that's been fairly supportive, but perhaps a bit ominous as we approach the end of the session ahead of what, for many lenders, will be 4 days off from new rate sheets.
11:43AM  :  ALERT ISSUED: Shaking Off Some Weakness Following TIPS Auction
More of a "heads-up" alert here... MBS and Treasuries both contended with a small dose of weakness leading up to and following the 11:30am 10yr TIPS auction. It was almost enough of a loss to begin entertaining a reprice or two from the jumpiest few lenders, but so far, both sides of the market are bouncing back just a little bit.

For MBS, that's equated to Fannie 3.0s hitting 104-18 and moving back up to 104-20. 10yr yields edged up to 1.693 and have eased only slightly in the past few minutes to 1.688. We're not out of the woods yet, but we're still moving through them.
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.

Tim Mitchell  :  "Thanks guys, i've been doing mostly govies for the last couple of months and avoiding harp so i wasn't sure what to expect"
Andrew Benson  :  "Tim: a better question is: Is anyone NOT getting appraisal waivers on HARP loans. I think we are probably close to 95% waivers on those."
Scott Valins  :  "yes"
Tim Mitchell  :  "is anyone getting appraisal waivers on HARP loans?"
Brent Borcherding  :  "Correct, Hodges...as long as they gift 20% or more it's fine. Less than buyer must contribute 5%."
Matt Hodges  :  "i can't remember how long ago it was, but 20% gift on conv also was acceptable (at that time)"
Timothy Baron  :  "I know you can do that FHA, Scott."
Matt Hodges  :  "can't answer on kosher, but it meets guidelines"
Scott Valins  :  "is it kosher for parent to sell home to child and down payment all be in form of gift of equity?"
Paul L. Martin  :  "Which is good...But market does not care about Greece stil not having a deal?"
Ira Selwin  :  "Clinton to announce at 8 P.M. that Israel and Hamas agreed on principals for a cease-fire agreement, an Israeli diplomatic source said, noting that there will be no signed agreement"
Oliver S. Orlicki  :  "cease fire to be announced shortly according to USA today"
Oliver S. Orlicki  :  "i am not locking until dec 1"
Christopher Stevens  :  "Most of my LO's locked quite a few Mon/Tues and I can hear crickets today."
Christopher Stevens  :  "Interested to know if there are a lot of lock requests today."

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