MBS Live: MBS Morning Market Summary
Like a jilted lover learning how to trust again, MBS were tentative at first, and Treasuries hesitated at 1.97 as they descended from morning weakness, but both have rallied directionally since then.  The possibility and/or hope is that the highest yields and lowest prices this morning, constituted some sort of final push to the furthest reaches of the pre-FOMC range.  Big volume came into Treasuries 7 minutes before Fed's Bullard's speech in Frankfurt.  Either the clocks in Germany are running 7 minutes fast or dealers saw inventory getting lighter after the Fed's buying operation in 7-10yr maturities.  Supply/Demand imbalances can often have an effect on Treasuries during and after the Fed's scheduled Treasury buying from 10:15-11:00am.  Whatever the case, Bullard's comments certainly didn't hurt, as they were more dovish than usual.  Even though he was making a case for European central bank policies, his comments were essentially endorsing current policy in the US, saying the QE is the best approach when rates are near zero.  Fannie 3.0s are now back to a very important technical zone at 102-16 as 10yr TSYs fall to mid 1.95's.
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
102-09 : -0-01
FNMA 3.5
104-32 : -0-01
FNMA 4.0
106-04 : -0-01
FNMA 4.5
107-01 : +0-00
GNMA 3.0
103-21 : -0-02
GNMA 3.5
106-27 : -0-04
GNMA 4.0
107-14 : -0-03
GNMA 4.5
107-11 : -0-01
101-28 : -0-02
104-25 : -0-01
105-28 : -0-01
106-04 : -0-04
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.

10:15AM  :  MBS Take a Small Hit From Recent Treasury Spike
We just had a fairly quick flush of of Treasury prices on an isolated spike in volume. Looks like several big trades in cash Treasuries with some response in futures just after 10am. This took yields into the 1.99s. The volume spike hasn't quite died down and MBS haven't quite decided on the extent to which they'll follow, but so far, we've been holding right around an eighth of a point weaker from the first rate sheets of the day, and look to be bouncing back now.

This is a similar to start to yesterday morning, but with earlier selling this time. The move in Treasuries may have been met with buying support before getting a chance to hit 2.0%. This gives it a bit of a different tone than yesterday (yesterday, 10yr yields just went dead flat after their first rise, and then broke higher), and one that is more hopeful as far as finding a supportive ceiling is concerned.

More important than "hope" for a ceiling is 'respect' for 2.0%. It isn't only significant because it's a 'nice round number.' It's now also the scene of a big volume move and bounce. If 10's head back there and break, it would likely be bad for MBS. For now, with 10's back to 1.979 already, MBS are off their lows and we're likely avoiding reprice risk for now.
9:30AM  :  Bond Markets Slightly Weaker After Slight Volatility Overnight
Treasuries traded flat to slightly weaker in the Asian session and 10's just hit 1.972 heading into the European hours. After 2 hours of light selling (higher in yield), German bunds reversed course and went back to a choppy range near opening levels, pulling Treasuries down in the process.

The stock lever has been fairly well connected overnight and this morning (something we haven't seen much recently, and not an uncommon side effect of "auto-pilot" mode when preparations for hotly anticipated data have already been made.

10yr yields never made it under 1.95 overnight and early domestic trading started dragging yields higher. We say 1.977 just after 8am, but are at 1.970 currently.

MBS opened flat to yesterday's close and have moved lower 3 ticks so far this morning to 102-08. S&P futures dipped with Treasury yields overnight, but have also bounced back this morning, now indicating a moderately positive opening bell for stocks.

Fed speakers are the only notable events today with Bullard at 11:30 and Dudley at 1pm.
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.

Steve Chizmadia  :  "Does that chart mean appraiser can start making time adjustments for the better on their reports that underwriters won't laugh at and appraisal management companies won't send back for revisions?"
Matthew Graham  :  "that's a cool link from the NY Fed in the News Stream at 9:44"
Hugh W. Page, M.B.A.  :  "I sure hope you’re right because if you look at the longer term advanced chart below that support it looks like a fair drop from there to the next level. Bounce baby bounce!"
Steve Chizmadia  :  "Just lloked at the advanced charts for 1M and 3M timeframes, Crazy and depressing sell off, but the 3M charts looks to support a strong floor of resistance just below current levels. Hoping we can bounce off of it as well as we did last time"
Matthew Graham  :  ""shifty around 102" I think, would be the thesis"
Matthew Graham  :  "yeah, the 5 sessions in March that we spent trading close to 102-00, did see more 3.5 origination, but on either side of those 5 sessions, the next lowest intraday prices were over 102-18, so it wasn't an especially period of observation"
Ted Rood  :  "Maybe we can threaten it again and it will cease plummeting endlessly."
Steve Chizmadia  :  "Funny you say that Ted, I was just wondering when we would start looking at 3.5 as the main production coupon. Nice thing is, last time I thought that and asked MG about it, the 3.0 coupon was back in the picture shortly thereafter"
Ted Rood  :  "At some point soon (if not already) 3.0 coupons become pretty meaningless if they drop much further!"
John Tassios  :  "Hopefully Bernanke will be dovish tomorrow, inflation is too low for his comfort zone, so I think he will say that QE will continue rest of year at current levels / hopefully the minutes will be more dovish too"
Oliver S. Orlicki  :  "in the red again. Depressing recently. Tomorrow should at least give us some clearer direction as to whether we continue this move up"
Roger Moore  :  "gonna be slow bleeding today. Can't wait! Sell. Re-sell. Sell. Re-sell. "
Niccolo Satullo  :  "positive thinking tuesday "
Dan Clifton  :  "so much for the glimps of green this am"

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