MBS Live: MBS Morning Market Summary
By all rights, the week has yet to begin with low volume, no news, and limited impetus for bond market movement.  The two key considerations for Treasuries and MBS look to be the stock lever and technical resistance at 1.84 in 10yr yields.  With respect to the former, stocks are at their highs of the day and so too are 10yr yields.  MBS actually put their lows of the day in just before the Fed's scheduled buying operation in Treasuries began at 10:15, but at 103-18, remain nearer the lows of 103-17 than the highs of 103-21.  All things considered, the more important conclusion about those price levels is the narrowness of the range rather than any significance in the movement.
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
103-18 : -0-03
FNMA 3.5
105-25 : -0-02
FNMA 4.0
106-19 : -0-01
FNMA 4.5
107-20 : -0-01
GNMA 3.0
104-27 : -0-03
GNMA 3.5
107-24 : -0-03
GNMA 4.0
108-23 : -0-03
GNMA 4.5
109-10 : +0-01
103-05 : -0-02
105-10 : -0-03
106-07 : -0-01
106-27 : +0-00
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.

10:36AM  :  Fed's Yellen says forceful stimulus still needed
Janet Yellen, the Federal Reserve's influential vice chair, said on Monday the central bank's aggressive monetary stimulus is warranted given how far below its full potential the economy is operating.

Downplaying the potential costs of the Fed's unconventional easing efforts, which currently include $85 billion in monthly asset purchases, Yellen highlighted the dangers of a prolonged period of economic malaise.

"Insufficiently forceful action to achieve our dual mandate also entails costs and risks," Yellen told a conference sponsored by the National Association of Business Economists. "At present, I view the balance of risks still calling for highly accommodative monetary policy to support a stronger recovery and more rapid growth in employment."
10:11AM  :  ECON: ISM New York Index Rises To 11-Month High
New York City business activity expanded at the fastest pace in 11 months, according to the survey taken by the Institute for Supply Management-New York (ISM-NY). Current Business Conditions came in at 58.8 in February.

The headline index has been on a steadily improving path since last May, with October’s hiccup from Hurricane Sandy the noticeable blemish.

The Six-Month Outlook rose to 64.1 in February, bouncing off January’s four-month low.

Employment fell to a nine -month low of 49.3 in February and has been uneven, below the breakeven 50 mark in two of the last three months.

Quantity of Purchases, 62.5 in February, matched December’s 19-month high.
9:19AM  :  Bond Markets Slightly Weaker Into Domestic Hours
Asian hours kicked off the week of trading with a slight extension of Friday afternoon's Treasury mini-rally (experienced as flatness in MBS). China's move to increase housing costs for 2nd homes in bustling cities sapped a broad swath of Asian equities indexes, helping out bond markets marginally. The Nikkei, however, managed to improve after the leading nominee to govern the Bank of Japan said, if elected, he'd put no limit on the amount of QE conducted by the Bank in the effort to fight deflation. In addition to helping lift Japanese stocks, this was also bond-market friendly.

10yr Treasuries made it as low as 1.828 just after European markets opened but the balance of the European session was moderately negative for German Bunds and Treasuries with two big bounces at 1.2983 in Euro (slightly higher than Friday's 1.2965--a two month low). Equities futures improved after falling in concert with Asian indexes and the stock lever has been somewhat connected overnight and into domestic hours.

Volatility increased modestly in early domestic trading with 10yr yields and MBS both moving into the red after opening slightly stronger. 10's are currently down just over half a bp at 1.8515 and Fannie 3.0 MBS are 3 ticks worse at 103-18. S&P futures are still 3 points from matching Friday's 4pm levels and European markets are slowing down their late-session "risk-on" move.

There is no significant economic data scheduled for the domestic session, leaving tradeflows, technicals, and the stock lever in play for the rest of the day. In those regards, the stock lever has been relatively less connected than it otherwise might be and tradeflows have been more negative for bond markets than positive. In most ways, this is to be expected with 10's having collided with epic technical resistance in the 1.84 neighborhood. In this morning's Week Ahead we noted that the events later in the week were more likely to make firmer technical suggestions than the relatively barren calendars earlier in the week.
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.

Matt Hodges  :  "i get 45-50 on both, with 80% ltv and strength of file"
Jason Anker  :  "RP - freddie does not cap DTI at 45% thats an overlay. Freddie is much better at 45+ dti than Fannoe is"
Robert Rippy  :  "I usually run my files through LP but Freddie caps the debt ratio at 45%. Does Fannie cap the ratio at 45% as well?"
Jason Anker  :  "1.86 will be the limit on 10yr I hope - could feel some pain today otherwise"
Christopher Stevens  :  "GM all. Be very interesting which side of the 1.84 line the 10YR decides on."
Oliver S. Orlicki  :  "Gm. Sub 1.84"
John Tassios  :  "yep, stock futures down 53 points overnight"
Scott Valins  :  "1.83 in early overnights..."

Read what our user's have to say about MBS Live on LinkedIn.
» Start a two week free trial of MBS Live.