MBS Live: MBS Morning Market Summary
After moving to disconcertingly weak levels in the Asian session, bond markets rallied back during European hours, ultimately coming in the door slightly improved from yesterday's ugly closing levels.  Since then, weakness in stocks--helped along by lower-than-expected Consumer Sentiment--has helped facilitate some additional improvement.  Although it's been an "inside day" for Treasuries (where today's highs and lows are INSIDE yesterday's highs and lows), it hasn't merely looked like a consolidation (which an "inside day" typically suggests).  Instead, rates have been trending lower with a fair bit of regularity and rhythm, though we'd emphasize that it hasn't been fast and furious.  Anecdotes from market participants confirm that activity is already dwindling, as expected, ahead of the three day weekend.  This little bounce back and ebb in participation is exactly what we hoped we'd see (read more about that), and now we're hoping we continue to see it through the close!  
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
104-03 : +0-05
FNMA 3.5
105-31 : +0-02
FNMA 4.0
106-21 : +0-02
FNMA 4.5
107-21 : +0-01
GNMA 3.0
105-03 : +0-05
GNMA 3.5
107-31 : +0-02
GNMA 4.0
109-05 : +0-01
GNMA 4.5
109-07 : -0-01
FHLMC 3.0
103-25 : +0-05
FHLMC 3.5
105-24 : +0-03
FHLMC 4.0
106-09 : +0-01
FHLMC 4.5
106-27 : +0-01
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.
10:11AM  :  ECON: Consumer Sentiment Lowest Since Late 2011
- Jan Preliminary Sentiment 71.3 vs 75.0 Consensus
- 'Current Conditions' 84.8 vs 88.0 consensus
- 'Expectations' 62.7 vs 65.2 consensus
- Sentiment lowest since Dec 2011
- 'Current Conditions' lowest since July 2012
- 'Expectations' lowest since Nov 2011

(Reuters) - Thomson Reuters/University of Michigan Surveys of Consumers' preliminary January consumer sentiment index fell to 71.3 from 72.9 in the final December report, according to a report released on Friday. Economists in a Reuters survey expected a preliminary January sentiment index reading of 75.0.

Survey director Richard Curtin: "The most unique aspect of the early January data was that an all-time record number of consumers - 35 percent - negatively referred to the fiscal cliff negotiations. Importantly, the debt ceiling debate is still upcoming and could further weaken confidence."
9:54AM  :  Bond Markets Hold Moderate Gains After Overnight Scare
On the heels of stronger-than-expected GDP in China and growing speculation about the Bank of Japan's potentially aggressive shift at next week's policy meeting (removing 0.1% rate floor and embarking on open-ended QE), risk markets (equities, Yen, Euro, bond yields) moved higher throughout the Asian hours. This let to 10yr yields to a break of yesterday's highs just before 3am at 1.896.

Europe, however, took things back in the other direction. German Bunds fell from 1.64 to 1.56 in a few short hours and US Treasuries followed a lower magnitude version of the same movement, bringing 10's in the door just under 1.86 and MBS 5 ticks higher at 104-03. These are the same levels that prevail at the moment, as we wait for Consumer Sentiment as the sole economic data of the morning.
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  :  "how's this for blaming the fiscal cliff: "The most unique aspect of the early January data was that an all-time record number of consumers - 35 percent - negatively referred to the fiscal cliff negotiations," survey director Richard Curtin said in a statement."
Victor Burek  :  "still gonna be blamed on fiscal cliff..thus the no response"
Ted Rood  :  "Saw the withholding on my Jan commission check and my sentiment fell."
Matthew Graham  :  "yeah, with a sort of half-hearted, can-kicky resolution that may leave some folks understandably less optimistic "
Ted Rood  :  "What do those stupid consumers know anyway? How can they let a little thing like rampant fiscal uncertainty and tax hikes depress them???"
Victor Burek  :  "it will be blamed on fiscal cliff"
Brent Borcherding  :  "How about 'dem apples!@"
Matthew Graham  :  "THOMSON REUTERS/U. OF MICH EXPECTATIONS INDEX AT LOWEST SINCE NOV 2011 "
Matthew Graham  :  "THOMSON REUTERS/U. OF MICH CONSUMER EXPECTATIONS INDEX PRELIM JAN 62.7 (CONSENSUS 65.2) VS FINAL DEC 63.8 "
Matthew Graham  :  "THOMSON REUTERS/U. OF MICH CURRENT CONDITIONS INDEX AT LOWEST SINCE JULY 2012 "
Christopher Stevens  :  "wow...that is quite a drop"
Matthew Graham  :  "THOMSON REUTERS/U. OF MICH CURRENT CONDITIONS INDEX PRELIM JAN 84.8 (CONSENSUS 88.0) VS FINAL DEC 87.0 "
Andrew Horowitz  :  "guess consumers aren't feeling the recovery"
Matthew Graham  :  "THOMSON REUTERS/U. OF MICH CONSUMER SENTIMENT INDEX AT LOWEST SINCE DEC 2011 "
Matthew Graham  :  "THOMSON REUTERS/U. OF MICH US CONSUMER SENTIMENT PRELIMINARY JAN 71.3 (CONSENSUS 75.0) VS FINAL DEC 72.9 "
Matthew Graham  :  "the decades-long bullish trend in treasuries could see 10's rise into the low 3's any time this year and still be bullish long term."
Steven Stone  :  "it all depends on how these macro issues resolve themselves"
Matthew Graham  :  "that would be late in the year of it's 2013, but it'd be fast"
Matthew Graham  :  "wow. well... we can't really assume that things will happen like past precedents suggest because there is no past precedent, but there are somewhat similar patterns in the past and rarely have they seen less than a 150 bp rise"
Scott Valins  :  "yes he did CS and the other guy in studio said 2.0 is high. "
Matthew Graham  :  "i'd be flat-out shocked if 2.35 is where we top out in 2013"
Christopher Stevens  :  "SV- he followed that statement with the won't stay up there for long"
Scott Valins  :  "2.25 - 2.35 high yield for 2013 says Dicky Santelli"
Ira Selwin  :  "Should also shoot it out of AUS if it exceeds, if I remember correctly."
Ira Selwin  :  "So it is based on your base loan amount"
Ira Selwin  :  "MIP - when added to the base mortgage, may exceed the area limit"
Jason York  :  "on an FHA jumbo, the whole loan amount needs to be under the loan limit, not just the base loan amount, correct?"
Scott Valins  :  "CFPB LO Comp Rule due out today"
Scott Valins  :  "I agree with JA. Great Day Ahead MG"
Jeff Anderson  :  "Thanks for the charts, MG. Good stuff as usual."
Victor Burek  :  "gm everyone, nice to see 10yr back under 1.87"
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