MBS Live: MBS Morning Market Summary
Today's trading is kicking off the week in a mostly typical Monday sort of way with ranges relatively contained, volume on the light side and limited data to digest.  The only thing providing a semblance of activity on the MBS Live Dashboard 2-day chart is the fact that Friday's range was similarly narrow, thus making today's 4-ticks between highs and lows seem bigger than they actually are. It's all an optical illusion though as Fannie 3.0 MBS have traded almost exclusively between 104-21 and 104-19, with only the outlying ticks pushing the range out to "4 ticks."  10yr yields have shown a bit more directional weakness, especially following the 11am conclusion of the Fed's scheduled buying in the 8yr maturity range in Treasuries ("Twist" buying).  It's common to see some minor volatility following these buying operations and also not uncommon for post-11am bond markets to be generally weaker as dealers keep prices higher ahead of the Fed.  But today's reaction is a bit spikier than normal perhaps because the broader currents of "risk-on/risk-off" are also lifting stock prices at the moment.  MBS have weathered that storm quite well so far, but Treasuries are quickly approaching a re-test of recent highs.
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
104-20 : -0-03
FNMA 3.5
106-12 : -0-03
FNMA 4.0
107-00 : -0-02
FNMA 4.5
107-26 : -0-01
GNMA 3.0
106-02 : -0-03
GNMA 3.5
108-12 : -0-03
GNMA 4.0
109-09 : -0-01
GNMA 4.5
109-09 : +0-01
104-10 : -0-02
106-01 : -0-04
106-16 : -0-02
106-31 : -0-01
Pricing as of 11:04 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.

9:59AM  :  Bond Markets Under Slight Pressure From Rising Stocks
Treasury yields and equities futures kicked off the overnight session in their highest territory, ostensibly due, in part to news of a Fiscal Cliff proposal over the weekend. While it was rejected by the White House, it did still signifiy some level of progress in the ongoing negotiations. But the real market mover during Asia's opening hours was the election in Japan, which saw the LDP party score a landslide victory in elections over the weekend. Risk markets rallied on the implication that the elections put the stimulus-friendly Shinzo Abe back in the Prime Minister seat.

As is frequently the case, the onset of the European session brought a shift in tone, this time in a positive direction for bond markets. The move wasn't huge, but was good enough to get 10yr yields down from 1.734 highs to 1.714 lows.

10's made it to the domestic session near those lows and MBS opened roughly a tick weaker than Friday's latest levels. Since then, the morning trade has been choppy and without much regard for economic data. If anything, Empire State Manufacturing took a bit of a bite out of equities futures and helped bond markets hold their ground. But the cash open saw equities move higher, which pressured bond markets back to their weakest levels of the overnight session.

If the current highs and lows marked the absolute boundaries of the session, it would be an incredibly sideways and boring day. There's no remaining economic data, though there are two Fed speakers as well as "Twist" buying from 10:15-11:00am in the 8year range.

MBS, specifically, are holding up a bit better than Treasuries at the moment, but even the latter may be attempting to establish some technical support in the mid 1.72's despite advancing stocks. Fannie 3.0's are nearer their highs of the morning, down only 2 ticks at 104-21, but trading has been sparse so far.
9:21AM  :  ECON: Tic Data Shows Foreign Investment In Treasuries Increased in October
- Outflow in Oct, $56.7 bln vs $4.3 bln Inflow in Sep
- $1.3 bln Inflow in Longer Maturities, Excluding Swaps
- Net purchases of Bonds/Notes $15.8 bln
- China/Japan Holdings moderately increased
- This data series isn't a major market mover for bond markets, speaking more to long term trends in buying/selling of US Treasuries among foreign investors

-The sum total in October of all net foreign acquisitions of long-term securities, short-term U.S. securities, and banking flows was a monthly net TIC outflow of $56.7 billion. Of this, net foreign private outflows were $56.4 billion, and net foreign official outflows were $0.3 billion.

Foreign residents increased their holdings of long-term U.S. securities in October – net purchases were $28.4 billion. Net purchases by private foreign investors were $22.3 billion, and net purchases by foreign official institutions were $6.2 billion.

At the same time, U.S. residents increased their holdings of long-term foreign securities, with net purchases of $27.1 billion.

Taking into account transactions in both foreign and U.S. securities, the net foreign purchases of long-term securities were $1.3 billion. After including adjustments, such as estimates of unrecorded principal payments to foreigners on U.S. asset-backed securities, the overall net foreign acquisition of long-term securities is estimated to have been negative $20.6 billion in October.
8:36AM  :  ECON: Empire State Manufacturing Weaker Than Expected
- Manufacturing Index -8.1 vs -1.0 Consensus, -5.22 Previous
- New Orders -3.7 vs +3.08 Previous

The December Empire State Manufacturing Survey indicates that conditions for New York manufacturers continued to decline at a modest pace. The general business conditions index was negative for a fifth consecutive month, falling three points to -8.1. The new orders index dropped to -3.7, while the shipments index declined six points to 8.8. At 16.1, the prices paid index indicated that input prices continued to rise at a moderate pace, while the prices received index fell five points to 1.1, suggesting that selling prices were flat. Employment indexes pointed to weaker labor market conditions, with the indexes for both number of employees and the average workweek registering values below zero for a second consecutive month. Indexes for the six-month outlook were generally higher than last month, although the level of optimism remained at a level well below that seen earlier this year.
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  :  "I know local banks that have the federal exemption as well so it may reach out to more than just federally chartered"
Matt Hodges  :  "in theory, yes"
Gaius Rossini  :  "so a wells/chase/citi MLO has an easier time than an MLO at a community bank"
Matt Hodges  :  "b/c most companies aren't federally chartered"
Matt Hodges  :  "there should be a level playing field, but there is not"
Matt Hodges  :  "registered LOs generally have to take exams administered in house (mine are 1 or 2 every month)."
Matt Hodges  :  "federally registered don't have to pass the federal exam & EVERY state they wish to do business in."
Matt Hodges  :  "there's a difference between state licensed and federally registered"
Gaius Rossini  :  "hey, does anyone here understand the nmls numbers?"
Matt Hodges  :  "theoretically they could fix it after 1/1/13, but that will mess with tax software programs as well as tax preparers"
Jason Harris  :  "Yes...but somehow it is being held hostage this year based on this negotiations"
Gaius Rossini  :  "i've met a small number of staffers before, they don't know what they're doing. unfortunately, i've met their bosses too, and they also don't know"
Matt Hodges  :  "as i understand it, the AMT is not part of the fiscal cliff - Congress just failed to tie it to inflation and each year they renew the inflation rider, correct?"
Jason Harris  :  "I called my congessman on Friday to complain about the AMT.....costs me just undr $11,000 if they don't get it managed....I talked to some 20 year old kid who told me they were on it and that everbody agrees it needs to be done....somehow not very re-assurred"
Jeff Anderson  :  "GM, all. What time are the daily press conferences at for the Dems and Reps to point fingers today?"

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