MBS Live: MBS Afternoon Market Summary
Bond markets were ready to take short term guidance from the "government shutdown" resolution or lack thereof.  This has been far from a primary motivation, but we were seeing signs that momentum was fading over the past several days and were prepared for more weakness than we got after the shutdown deadline passed.  That's because the weakness would have been the logical consequence of a "deal."  A deal would have instilled a small bit of confidence in the fiscal challenges ahead and could have been slightly "risk positive." 

A lack of a deal--while expected by some--was not the consensus.  Markets are left asking "what now?"  The reason the lack of a deal throws off the game-plan is that it may well delay the release of the jobs report on Friday.  There is already ample media coverage saying the jobs report will not print.  Indeed, it may not, but then again, it still could, even if a shutdown deal doesn't happen until Thursday.  

So here we are with the "next best thing" in the form of ADP Payrolls coming up tomorrow morning, and it may be doing all of the week's heavy lifting in terms of economic data that informs Fed policy.  All this shuffling of attention resulted in a rigid, technical movement throughout the day for bond markets, albeit into slightly weaker territory.  It seems likely that tomorrow morning's ADP is the next big potential mover.
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
97-17 : -0-08
FNMA 3.5
101-22 : -0-07
FNMA 4.0
104-25 : -0-05
FNMA 4.5
106-25 : -0-02
GNMA 3.0
98-10 : -0-10
GNMA 3.5
102-17 : -0-08
GNMA 4.0
105-11 : -0-04
GNMA 4.5
107-10 : +0-00
97-05 : -0-08
101-13 : -0-07
104-13 : -0-05
106-14 : -0-01
Pricing as of 4:09 PM EST
Afternoon 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 afternoon.

12:22PM  :  ALERT ISSUED: Some Lenders on the Edge of Reprice Risk
This is an unsatisfyingly ambiguous situation for reprice risk. Some lenders who were out with rates early enough in the day never saw prices move high enough for a positive reprice. Thus current prices aren't low enough for them to be at high risk of repricing.

Other lenders who priced later in the morning did so near the highs of the day for MBS and we're now a solid 6/32nds off those highs. This would normally be enough to consider ourselves on the edge of reprice risk, but the several instances of technical support around 101-20 in Fannie 3.5's today and yesterday help lessen the immediacy of the risk.

They also serve as a good line in the sand for increased risk. Risk has moved from "unlikely" to "possible," but wouldn't become "probable" without a sustained or significant break below 101-20. Bottom line: can't rule it out, but not time to count on it just yet.
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