MBS Live: MBS Morning Market Summary
Today's trading has provided a bit of relief to yesterday's disconcerting run at technical boundaries.  Even though past precedent suggests we may well have weathered additional weakness without confirming a big, negative shift, it's less harrying to see a moderate bounce back into friendlier territory.  That said, we're not out of the woods yet.  Fannie 3.0 MBS are grinding sideways in a relatively wide range around yesterday's highs.  Things are a little less positive for Treasuries, where 10yr yields weren't able to make it back to yesterday morning's lows and have been leaking slightly higher since the Fed's scheduled "Twist" buying.  Additionally, we've seen generally more downbeat Cliff headlines so far today and couldn't rule out further weakness on a positive headline, or even simply a "lack of negative headlines."  On a final note (no pun intended), there's the final Note auction of the year with 7yr Treasuries at 1pm--not typically a major market mover, but potentially a supporting actor this afternoon.
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
104-12 : +0-05
FNMA 3.5
106-06 : +0-02
FNMA 4.0
106-28 : +0-00
FNMA 4.5
107-23 : -0-02
GNMA 3.0
105-27 : +0-04
GNMA 3.5
108-07 : +0-02
GNMA 4.0
109-06 : -0-02
GNMA 4.5
109-05 : -0-03
104-03 : +0-05
105-27 : +0-02
106-12 : +0-00
106-26 : -0-05
Pricing as of 11:06 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.

9:37AM  :  Bond Markets Tentatively Improved, Regardless Of Data
The unfamiliar green glow of bond market gains has increasingly adorned the dashboard this morning though this remains a fairly recent and fairly shallow shift. After topping out at 2:20pm yesterday afternoon, 10yr yields pulled back, but never made it much below 1.82 before 5pm.

The overnight session was initially kind, seeing relatively strong support in Asia and Europe, but "relatively" is the key word. It wasn't a pronounced snap back to lower yields as much as it was a gradual easing--fueled by opportunistic buying and short covering--down merely to 1.80, give or take.

While Asia and Europe did no harm and caused no major waves, domestic accounts had their alarms set early to wake up and sell any overnight strength. While this was only a tactical, short-term move, it brought yields back up to 1.833 by the 8am Open. Once those tactical trading positions saw a decent amount of support pushing back at the highs, they began covering those short-term bets while those pushing back continued buying at a moderate pace as well.

The morning's only economic data--Housing Starts--was a non-issue in all this movement, garnering effectively no response in equities or bond markets. It was simply coincidentally reported in the midst of directional market movement, but isn't remotely the source of it.

MBS began the the session in similarly neutral territory vs yesterday's latest levels and have similarly improved in morning trading. Things were more tentative ahead of the cash open for stock markets but have added slightly to gains since then, bringing Fannie 3.0s up 5 ticks on the session to 104-13 and 10yr yields within striking distance of overnight lows at 1.800.

Snowballs roll in both directions... All we need now is a discouraging Cliff headline to firmly reinforce the bigger picture "range boundary zone" centered on the 1.85 levels hit yesterday in 10yr yields. More on epic technical battles in The Day Ahead, if you haven't seen it yet this AM.
8:39AM  :  ECON: Housing Starts Weaker Than Expected, Permits Stronger
- Housing Starts 861k vs 873k Consensus
- Building Permits 899k vs 875k Consensus
- Permits highest since July 2008

The U.S. Census Bureau and the Department of Housing and Urban Development jointly announced the following new residential construction statistics for November 2012:

Privately-owned housing units authorized by building permits in November were at a seasonally adjusted annual rate of 899,000. This is 3.6 percent (±1.1%) above the revised October rate of 868,000 and is 26.8 percent (±1.7%) above the November 2011 estimate of 709,000. Single-family authorizations in November were at a rate of 565,000; this is 0.2 percent (±0.8%)* below the revised October figure of 566,000. Authorizations of units in buildings with five units or more were at a rate of 307,000 in November.

Privately-owned housing starts in November were at a seasonally adjusted annual rate of 861,000. This is 3.0 percent (±14.3%)* below the revised October estimate of 888,000, but is 21.6 percent (±12.5%) above the November 2011 rate of 708,000. Single-family housing starts in November were at a rate of 565,000; this is 4.1 percent (±13.3%)* below the revised October figure of 589,000. The November rate for units in buildings with five units or more was 285,000.

Privately-owned housing completions in November were at a seasonally adjusted annual rate of 677,000. This is 9.7 percent (±13.7%)* below the revised October estimate of 750,000, but is 16.1 percent (±9.5%) above the November 2011 rate of 583,000. Single-family housing completions in November were at a rate of 520,000; this is 2.4 percent (±11.7%)* below the revised October rate of 533,000. The November rate for units in buildings with five units or more was 150,000.
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.

Jason York  :  "can't take the future ex off the mortgage unless you can show the remaining borrower has made payments for the past 12 months out of their own individual account"
Jason York  :  "you can do an ARM on DURP, but only if the current loan is an ARM, can't go fixed to ARM"
Bryce Schetselaar  :  "If borrower currently is in an ARM, it is my understanding that they can go to another ARM"
Matt Hodges  :  "Fannie DURP: can you 1. remove the future Ex from title and mortgage and 2. go from 30yr to 5/1ARM?"
Matthew Graham  :  "that'd be on the optimistic side of the spectrum, but stops short of laughably silly"
Brandon Blue  :  "MG, are you saying it basically leaves a chance for rates to stay low, even after the fiscal resolution?"
Matthew Graham  :  "" In fact, even if yields can simply hold sideways, as long as they bounce back lower BEFORE a Cliff deal is imminent, it leaves room for current weakness to be construed as a "surprise inspection of the range." This, in itself, would leave room for that recently explored range boundary to have a shot at being a supportive ceiling against any post-Cliff-deal sell-offs.""
Mike Drews  :  "at least this give us a little cushion between us and 1.85 if the cliff gets resolved soon"
Andrew Horowitz  :  "1.835 and 104-07 hold strong like bull"
Andrew Horowitz  :  "and the pendulum swings the other way, tomorrow the republicans will speak and so on and so on and so on"
Adam Dahill  :  "Nice. 1.79 on the 10yr. Almost took some lumps yesterday but decided to hang in there. "
Jason York  :  "also, only on loan amounts over $625,500, I guess that is why I never saw it"
Victor Burek  :  "over 95 it is 150bps"
Victor Burek  :  "ml letter 12-4"
Jason York  :  "anyone seen this - Just ran DU on an FHA Jumbo purchase, and got an approve/eligible, but it stated an FHA Annual Premium Factor of 1.45%"
MMNJ  :  "We deliver to Wells all day long LP >45"
Christopher Stevens  :  "CM- BB&T and Chase go to 50% and Flagstar has no max on LP"
Mike Drews  :  "CM-Suntrust"
Matthew Graham  :  "RTRS- US NOV HOUSING PERMITS 899,000 UNIT RATE (CONSENSUS 875,000) VS OCT 868,000 UNIT RATE (PREV 868,000) "
Matthew Graham  :  "RTRS- US NOV HOUSING STARTS 861,000 UNIT RATE (CONSENSUS 873,000) VS OCT 888,000 (PREV 894,000) "
Matthew Graham  :  "RTRS- US NOV HOUSING STARTS -3.0 PCT VS OCT +5.3 PCT (PREV +3.6 PCT) "
Christopher Max  :  "Are there any lenders that allow 45%+ DTI with LP? It seems like most of them cap at 45% these days. "

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