MBS Live: MBS Morning Market Summary
As noted in the Week Ahead as well as the first update below, there's been little to inform market movements apart from traders watching and reacting to each others' tradeflows.  That's resulted in a decidedly sideways momentum to begin the week with the small amount of overnight and AM volatility occurring within a fairly narrow range relative to last week's big moves.  Fannie 3.0s have held between 104-04 and 104-09 while 10yr yields--a bit choppier--have stayed between 1.89 and 1.916.  The latter is a fairly critical inflection point at the moment as it marked a firm "floor" for yields coming into Friday morning, and offered another temporary bounce just before Friday's close.  Now today, we've seen another good bounce, but this time with 1.916 as a ceiling rather than a floor.  That's a behavior pattern that at least allows for hope that bond markets can start to bounce back without having to sell-off to cheaper prices.
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
104-06 : -0-01
FNMA 3.5
106-05 : +0-00
FNMA 4.0
106-31 : +0-01
FNMA 4.5
107-30 : -0-02
GNMA 3.0
105-15 : -0-03
GNMA 3.5
108-02 : -0-01
GNMA 4.0
109-11 : +0-01
GNMA 4.5
109-08 : -0-03
103-28 : -0-01
105-28 : -0-01
106-17 : +0-01
107-03 : -0-03
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.

9:38AM  :  Bond Markets Struggling Sideways, Lacking Inspiration
After last week's major selling spree for bond markets, Asian and European trading sessions offered few reasons to be hopeful or pessimistic about the day ahead. 10yr yields moved down as low as 1.881 during Asian hours (less than a 2bp move from Friday's latest levels) before bouncing back to 1.912 when Europe entered the fray. A choppy sideways range persisted through the first hour of domestic trading, and though 10's opened in the green, the yield lows from overnight have continued to creep higher while highs have been more of a horizontal trend near 1.91. All of the above translated to MBS opening up a few ticks higher, moving into the red a tick, and now back unchanged at 104-06.

The first takeaway from the activity so far is that the market is delivering on our suspicion that tradeflows will be the focus in the absence of meaningful data and other scheduled movers (discussed in more detail here). The second conclusion is that those tradeflows have yet to suggest that the market is eager to buy the sell-off back to stronger levels, but neither is it eager to snowball to weaker levels. Somewhat ironically, before initiating their own larger directional tradeflows, traders are waiting for other traders to initiate their larger directional tradeflows. That seems like a tense situation, no?

Things could still go either way this morning. Stocks are currently opening up a few points weaker and futures were already falling into the cash open as well. There's perhaps been a slightly detectable correlation in bond markets (in that yields ticked microscopically lower on the weak stock open), but the morning has been more readily characterized by a disconnection of the stock lever. This is probably due to horse-trading on ECB rate-cut expectations, where a think tank report is circulating suggesting "no cut"--something that stocks wouldn't much like but that also doesn't apply any downward pressure to Treasury yields.
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.

Ken Crute  :  "if LPMI was a lums sum the policy is tranfered if it was a monthly LPMI many companies convert to monthly BPMI "
Jason York  :  "on a HARP loan with LPMI, it order to transfer it, it needs to be set to a monthly paid by the borrower, correct?"
Chris Kopec  :  "Auction week might also be a factor."
Victor Burek  :  "give it time...traders just getting back to work"
Matthew Graham  :  "however, it could be a factor. Accounts are probably tentative about being the first back in the water"
Matthew Graham  :  "I wouldn't be upset if the march were a bit more convincing"
Oliver S. Orlicki  :  "the march to 1.8 begins"
Scott Valins  :  "no mention of that in the Bloomberg article under News Stream"
Andy Pada  :  "Are Fannie/Freddie loans exempt from QM requirements?"
Scott Valins  :  "GM all. I wonder, if the QM rule passes with a safe harbor of 43 DTI or better, is that the max DTI we'll see across the board as no lender wants to subject to potential law suits?"
Oliver S. Orlicki  :  "Gm. Green start."

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