MBS Live: MBS Morning Market Summary
Although bond markets have been far from completely flat--in fact there was a solid 4bp swing in 10yr Treasuries overnight--both MBS and Treasuries are settling into relatively flat trading patterns as some of the morning volatility dies down.  "Risk-on" undertones via uneventful Cypriot bank reopenings and quasi hopeful Italian snippets pushed Treasuries higher during European hours, and right up to the mornings US economic data.  Not only was there a good show of technical support at 1.87% (same as yesterday morning), but the data has all been lackluster, with Chicago PMI experiencing the bigger miss.  The interesting thing about this morning's bond market resilience is that it's not actually in line with recent examples of "movement vs data/events."  In other words, bond markets should be just a bit weaker than they are if recent history and other trading levels (European metrics, stocks, etc.) are a guide, but the presence of month/quarter-end index buying is providing a small, relative boost, helping to keep us nearly unchanged .  The 7yr auction is coming right up at 11:30am.
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
103-05 : +0-00
FNMA 3.5
105-20 : +0-01
FNMA 4.0
106-20 : +0-00
FNMA 4.5
107-24 : -0-01
GNMA 3.0
104-18 : +0-01
GNMA 3.5
107-19 : +0-01
GNMA 4.0
109-01 : +0-02
GNMA 4.5
109-11 : -0-03
102-23 : +0-00
105-09 : +0-01
106-10 : +0-01
106-32 : -0-01
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.

10:02AM  :  ECON: Chicago Business Barometer Weaker Than Expected
- PMI 52.4 vs 56.5 Consensus
- New Orders 53.0 vs 60.2 Previously
- Production Index Lowest Since Sept 2009

The Chicago Purchasing Managers reported the Chicago Business Barometer veered downward, falling 4.4 points to 52.4 in March.

After a strong start to the year, the Business Barometer was knocked back by steep declines in New Orders, Production, and another disappointing dip in Order Backlogs.

All other Business Activity measures also declined in March, the exception being supplier lead times, which lengthened considerably.

NEW ORDERS: fell sharply after three months of solid gains
PRODUCTION: lowest since Sep 2009
ORDER BACKLOGS: ninth month of contraction in the last year
INVENTORIES: fourth contraction in the last six months
SUPPLIER DELIVERIES: longest in 15 months.
9:25AM  :  Bond Markets And Euro Risk Hit The Wall Again
As far as German Bunds are concerned, Eurozone risk continues to build as Bund yields continue to trend lower. The overnight session initially looked like Treasuries would follow. Volatility in Euros saw a sharp drop heading into the 5am EST hour, but they hit the wall right at yesterday morning's lows after Cypriot banks reopened and didn't immediately fall victim to rioting and pillaging.

The looming potential for Italian headlines had also been weighing on markets and Italian spreads improved just slightly after hitting their absolute widest post-election levels. Bersani says he will report to Italian President Napolitano on efforts to form a government. We're not sure what to expect, or when to expect it on that front, but such news "reserves the right" to be important.

After the Cypriot bank reopening and again after the somewhat optimistic Bersani headlines--very probably compounded by early domestic tradeflows--Euros and Italian spreads improved into the US trading hours. Between the earlier "wall" that was hit and those improvements, we have our range for the morning so far. Slightly weaker domestic economic data helped curb rising Treasury yields and gave a lift to MBS that opened in line with yesterday's lows.

We now sit just a tick weaker vs yesterday's close at 103-04 in Fannie 3.0s. Treasuries are up about 1.5bps at 1.859 after hitting 1.87 again. That's the same supportive ceiling yesterday morning... (sorta exciting? at least if it holds into the extended weekend). We'll be watching 1.87 as a technical line in the sand then, and of course staying tuned for any Italian headlines.
8:41AM  :  ECON: Q4 Final GDP Reading Slightly Lower Than Expected
- GDP +0.4 pct vs +0.5 pct consensus
- Consumer Spending +1.8 vs +2.1 previously
- Deflator +1.0 pct vs +0.9 pct consensus

Real gross domestic product -- the output of goods and services produced by labor and property located in the United States -- increased at an annual rate of 0.4 percent in the fourth quarter of 2012 (that is, from the third quarter to the fourth quarter), according to the "third" estimate released by the Bureau of Economic Analysis. In the third quarter, real GDP increased 3.1 percent.

The GDP estimate released today is based on more complete source data than were available for the "second" estimate issued last month. In the second estimate, real GDP increased 0.1 percent. While nonresidential fixed investment is higher than previously estimated, the revision to GDP has not changed the general picture of the economy.

The increase in real GDP in the fourth quarter primarily reflected positive contributions from personal consumption expenditures (PCE), nonresidential fixed investment, and residential fixed investment that were partly offset by negative contributions from private inventory investment, federal government spending, exports, and state and local government spending. Imports, which are a subtraction in the calculation of GDP, decreased.

The deceleration in real GDP in the fourth quarter primarily reflected downturns in private inventory investment, in federal government spending, in exports, and in state and local government spending that were partly offset by an upturn in nonresidential fixed investment, a larger decrease in imports, and an acceleration in PCE.

Motor vehicle output added 0.18 percentage point to the fourth-quarter change in real GDP after subtracting 0.25 percentage point from the third-quarter change. Final sales of computers added 0.10 percentage point to the fourth-quarter change in real GDP after adding 0.11 percentage point to the third-quarter change.
8:35AM  :  ECON: Jobless Claims Higher Than Expected
- 357k vs 340 consensus
- Last week revised to 341k from 336k
- Continued Claims 3.050 mln vs 3.043 mln consensus

In the week ending March 16, the advance figure for seasonally adjusted initial claims was 336,000, an increase of 2,000 from the previous week's revised figure of 334,000. The 4-week moving average was 339,750, a decrease of 7,500 from the previous week's revised average of 347,250.

The advance seasonally adjusted insured unemployment rate was 2.4 percent for the week ending March 9, unchanged from the prior week's unrevised rate. The advance number for seasonally adjusted insured unemployment during the week ending March 9 was 3,053,000, an increase of 5,000 from the preceding week's revised level of 3,048,000. The 4-week moving average was 3,076,250, a decrease of 28,000 from the preceding week's revised average of 3,104,250.
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  :  "yeah, if I didn't know any better, I'd say it looks like sidelined cash is coming into both sides of the market for month/quarter-end. Correlations are breaking down everywhere (i.e. no stock lever, TSYs breaking from euro/italy spread connections that have recently been rather tight)"
Christopher Stevens  :  "and look how that is effecting the bond market and MBS...oh wait it's not"
Victor Burek  :  "wow, s&p trades above recored closing high..all must be well"
Ted Rood  :  "Great time to visit if you bring a suitcase full of cash, you'll be most popular person in entire country."
Victor Burek  :  "and you cannot cash checks, so if you get paid 1000 by check, you must deposit it"
Matthew Carver  :  "Max cash to personal account holders is 300 euros per day… 1,000 for travel and all no large commercial transactions, unless approved. Sounds fun"
Jason Harris  :  "Here is the payoff number I have....not sure if it works for outside folks or not....but you can try - 877-729-6337"
Brayden Alexander  :  "title co. is telling me it is a 900 number and they can't access. My borrower is at work all day and unreachable."
Jason Harris  :  "Brayden...what are you running into?"
Brayden Alexander  :  "Can anyone offer me some help on obtaining a PNC payoff?"
philip mancuso  :  "Ap. seems like it turned a bit last week. The last 5-6 numbers that have come out have all been ok Not a real shocker if you look at history though. There's always and early year surge, especially in jobs."
Matthew Graham  :  "RTRS- US Q4 BUSINESS INVENTORY CHANGE +$13.3 BLN (PREV +$12.0 BLN) "
Andy Pada  :  "wow...all worse than expected"
Matthew Graham  :  "RTRS - US Q4 CONSUMER SPENDING +1.8 PCT (PREV +2.1 PCT), DURABLES +13.6 PCT (PREV +13.8 PCT) "
Oliver S. Orlicki  :  "Good data for bonds"
Matthew Graham  :  "RTRS - US FINAL Q4 GDP +0.4 PCT (CONSENSUS +0.5 PCT), PREV +0.1 PCT; FINAL SALES +1.9 PCT (CONS +1.9 PCT), PREV +1.7 PCT "
Matthew Graham  :  "RTRS - US JOBLESS CLAIMS 4-WK AVG RISES TO 343,000 MARCH 23 WEEK FROM 340,750 PRIOR WEEK (PREVIOUS 339,750) "
Matthew Graham  :  "RTRS - US JOBLESS CLAIMS RISE TO 357,000 MARCH 23 WEEK (CONSENSUS 340,000) FROM 341,000 PRIOR WEEK (PREVIOUS 336,000) "

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