MBS Live: MBS Morning Market Summary
MBS and Treasuries have come off their best levels of the morning just slightly, but remain in significantly better territory vs yesterday's latest levels.  Most of the gains were seen overnight in global bond markets, bringing Treasuries along for the ride.  It's hard to ascribe the movement to any single factor, both because there were many factors and the pace of the move was measured and pervasive.  Some of the more prominent stories include collectively lackluster economic data in Europe, a super weak Italian debt auction, a drastic revision to the haircut anticipations for Cyprus Popular Bank (from 40% to 80%), pronounced weakness in equities markets, let by Spain, and underyling defensiveness against Italy's political prospects.  Fannie 3.0s walked in the door already a quarter of a point higher, but have been holding their ground near 3/8ths higher since 9:30.  Treasury yields bottomed out perfectly in time for the beginning of the Fed's 10:15-11:00am purchase operation (right at the important 1.83/1.84 inflection zone) and have been sideways near 1.85 ever since.
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
103-07 : +0-12
FNMA 3.5
105-18 : +0-07
FNMA 4.0
106-19 : +0-03
FNMA 4.5
107-23 : +0-02
GNMA 3.0
104-19 : +0-11
GNMA 3.5
107-18 : +0-07
GNMA 4.0
108-32 : +0-04
GNMA 4.5
109-08 : +0-01
102-24 : +0-11
105-07 : +0-07
106-08 : +0-03
106-30 : +0-02
Pricing as of 11:09 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.

10:09AM  :  ECON: Pending Home Sales -0.4 vs +0.2 Consensus
February pending home sales flattened with limited buyer choices, but remained at the second highest level in nearly three years, according to the National Association of Realtors.

The Pending Home Sales Index,* a forward-looking indicator based on contract signings, slipped 0.4 percent to 104.8 in February from a downwardly revised 105.2 in January, but is 8.4 percent higher than February 2012 when it was 96.6. Contract activity has been above year-ago levels for the past 22 months; the data reflect contracts but not closings.

Before January, the last time the index showed a higher reading was in April 2010 when it was 110.9, shortly before the deadline for the home buyer tax credit.

Lawrence Yun , NAR chief economist, said limited inventory is holding back the market in many areas. "Only new home construction can genuinely help relieve the inventory shortage, and housing starts need to rise at least 50 percent from current levels," he said. "Most local home builders are small businesses and simply don't have access to capital on Wall Street. Clearer regulatory rules, applied to construction loans for smaller community banks and credit unions, could bring many small-sized builders back into the market."
9:40AM  :  European Concerns Surge Overnight, Bond Markets Rally
Wow, where to start... It's as if the Eurozone suddenly 'admitted' to financial markets that it would not be quite so easy to pull up from recent tail-spins brought about by Italy and Cyprus. Regarding the latter, it's more about observing the evolution in behavior and policy among EU officials and extrapolating that to Italy and Spain. Very little of this morning's movement has to do with Cyprus alone.

Ah yes, the movement. It's good so far! 10yr yields fell from 1.904 to 1.855 in the small space of 2 hours between 4:45 and 6:45am. MBS have opened up a quarter of a point higher at 103-03 and are currently 12 ticks higher at 103-07. 10's are currently down .0587 at 1.8506. S&P futures are down nearly 10 points.

The European session was (and still is) rife with headlines that all generally combine to push Euros and Bund yields lower. Data was mostly in line with estimates though estimates were generally calling for weakness. Eurozone Economic Sentiment was slightly weaker, Italian Industrial Production and Retail Sales continued to slide.

More alarming than any of the data (which just sort of provided a gloomy backdrop for the real market movers) was the breakdown of peripheral spreads in Spain and chiefly, Italy. Markets were already on the move before an Italian auction, but some of that movement was due to a "concession" for that auction. It's a good thing too because the bid-to-cover (1.22) was the lowest since well before the Euro crisis began. Spanish spreads vs German Bunds rose after Spain reported a higher debt to GDP forecast and a widening trade deficit. Though not the focal point of the overnight session, Cyprus continued to contribute with its Popular Bank saying that haircuts on balances over 100k may be as much as 80%.

But to place too much emphasis on any one event from the overnight session is to miss the bigger picture. That is to say there was no stand-out all-star performance among headlines or pieces of data. It was very much a team effort and everyone did their part. Italy, Spain, Cyprus... All helping peripheral spreads widen. The equities weakness is more pronounced than it recently has been. With S&P's approaching an all-time high close yesterday, 10 points of weakness overnight is helping round out a broader case for "risk off." On a final note, we're STILL WAITING for a conclusive headline out of Italy and markets are getting nervous about another breakdown in the attempt to form a government.

Upcoming domestic economic data is all but inconsequential as we continue to follow European headlines and market movements. 10yr Treasury resistance at 1.83-1.84 is still a big deal.
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.

Victor Burek  :  "yes, other than upfront"
Dustin McAlister  :  "no appraisal means nothing can be rolled in correct? "
B-C  :  "if not it is 1.20%"
B-C  :  "Dustin monthly is 1.25% if you are over 95 lTV based off of last logged value"
Dustin McAlister  :  "fha loan originated on 04-2010, looking at streamlining, is this correct, UFMIP 1.75%, monthly 1.25%?"
Matthew Graham  :  "well, unless I was floating with a bank that had a history of non sequitur and/or 'pipeline control' reprices, I'd probably be floating at least until closer to cut-off, barring intraday reprice risk. Leaving eggs in the basket overnight is another matter. That would be a more personal decision and one that is heavily dependent on what Italy news we get today, if any, as well as trading levels and the status of rate sheets closer to the end of the day."
Cory Bannerman  :  "haha.... you are correct sir. I just locked one... but need a little help to get another to the right mark"
Matthew Graham  :  "The only divination I'm good at is mind-reading, and right now I'm sensing that you're asking lock/float questions CB."
Cory Bannerman  :  "okay who has a magic 8 ball?... i need a consult.. will we break the 10 yr resistance today?"
Matthew Graham  :  "We're right at the top of the longer term channel CB, but more interested in 1.84-ish in 10's. "
Cory Bannerman  :  "WF priced"
Gus Floropoulos  :  "30 bps better"
B-C  :  "anyone get rates yet?"
Cory Bannerman  :  "MG- do you think these headlines are enough to carry us over resistance?... I know you don't Trend the MBS but it looks like it is right at the top of its trading trough"
Cory Bannerman  :  "Only an 'Insane Person' Would Want to Run Italy: Bersani from cnbc's http://www.cnbc.com/id/100595854"
Christopher Stevens  :  "Cypriots are a little miffed that money has been withdrawn from banks (by Russia) even though money supposed to be frozen. "Lawmakers have demanded that the central bank assemble a list of those customers who withdrew large amounts of money prior to the closure of the country's financial institutions. In particular, parliamentarians want to know if central bank employees or members of the government received early warning and were able to quickly rescue their assets. According to the Greek tel"
MMNJ  :  "http://mortgagefraudblog.com/perp-walk/item/21918-former-fannie-mae-sales-associate-charged-with-taking-kickbacks"
Victor Burek  :  "been floating since last week"
B-C  :  "are you floating VB?"
Christopher Stevens  :  "I'm not so sure it will follow. The spread seems to want to stay wide at this point"
Victor Burek  :  "sure is lagging"
Christopher Stevens  :  "What will be interesting is if MBS plays follow the leader with the 10YR"
Christopher Stevens  :  "The Euro under 1.28 is a great catalyst "
John Tassios  :  "MBS should be well over 103 today / hopefully they will close over 103"
Nathan Stotlar  :  "GM! Had to rub my eyes and drink more coffee to make sure I was seeing that 1.86 correctly. Wow. "
John Tassios  :  "10 year near it's bottom of the range of 1.84 level / Let's see if it will break under that level, then we may see lower rates for a while"
John Tassios  :  "Wow !! Treasuries are on fire / must be some headlines in Europe"
Jeff Anderson  :  "One of the Italian leaders said only an insane person would want to run Italy. Now that's political posturing I hadn't heard before."
Christopher Stevens  :  "Issues with capital at UK banks also. "
Oliver S. Orlicki  :  "Gm all. 1.86"

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