MBS Live: MBS Afternoon Market Summary
Today offers a very interesting set of circumstances to consider for MBS and mortgage rates.  First, we can safely assume that rate sheets have been erring conservatively heading into the extended weekend and less-liquid month-end environment.  It's tempting to pass the weakness off as purely a factor of the holiday-light volume, but low volume doesn't equate to weakness any more than high volume equates to strength. 

There were real reasons for rates to move higher this week, just as there were real reason for them to make similar moves during Thanksgiving week last year (Greek bailout headlines, remember those?).  The important difference is that last year offered real reasons for bond markets to bounce back after the holiday weekend, not to mention that there was another full week left in November.

This year, the Monday after Thanksgiving is also the first trading day in December, so any potential help from month-end buying has already played out (though some might be seen in limited quantities on Friday's half-day).  Whether or not we bounce back from these holiday blues will have more to do with domestic economic data as Monday leads off a busy week with ISM Manufacturing. 

Granted, we've seen a pretty solid 4-day rally back from last week's FOMC Minutes get mostly crushed in a day and a half, but that 4-day rally brought bond markets squarely to the CENTER of their long term (through May 2013) ranges.  The technical bounce against that midpoint is a possibility.  Rates are probably more nimble than they seem right now, ready to go either direction based on next Friday's Employment data, but willing to start taking the proverbial "lead-off" with next week's early data.
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
96-16 : -0-08
FNMA 3.5
100-28 : -0-11
FNMA 4.0
104-09 : -0-06
FNMA 4.5
106-21 : -0-03
GNMA 3.0
97-20 : -0-11
GNMA 3.5
101-30 : -0-11
GNMA 4.0
105-06 : -0-05
GNMA 4.5
107-11 : -0-04
96-02 : -0-10
100-20 : -0-11
103-29 : -0-07
106-12 : -0-03
Pricing as of 4:04 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.

1:46PM  :  Looks Like We're Turning The Corner
We've been stepping back from the edge for just over an hour now and have put enough distance between ourselves and the lows that it's probably safe to conclude the selling momentum has abated for today. Treasuries are being scooped up opportunistically just a bit as are MBS. This has brought Fannie 3.5s up to 100-27 from 100-19 earlier. We're right in line with where we leveled-off following the Chicago PMI and Consumer Sentiment selling spree.

Does that mean lenders will now reprice positively? Tough question right now. Certainly, there is less impetus than there otherwise would be due to the extended weekend ahead (half day on Friday, to be fair). Even then, it could be a bit early still for most lenders. Indeed some may still have negative reprices to get out. But there is some small chance for an odd positive reprice or two if this bounce back holds at current levels or moves higher. All we know about those chickens is that they're, as yet, unhatched.
11:36AM  :  ALERT ISSUED: More New Lows for MBS; Reprice Risk is Ongoing
There are only going to be a few lenders out there who aren't at risk for negative reprices and you will likely be able to tell based on the lateness of their rate sheets and the noticeably weaker pricing. Even then, we still couldn't rule out reprice risk for any lender who was out with rates more than 5 minutes ago

Bond markets are starting to try very hard to have one of their familiar pre-Thanksgiving meltdowns. 10yr yields are off to the races, up to 2.757 moments ago. Fannie 3.5s are down almost half a point at 100-24.
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.

John Rodgers  :  "The day a person decides that his career is originating loans is the day they start getting more business. That day happened for me 12 or 13 years ago. Rolling into the office at 10am, leaving at 4pm, not answering the phone after hours or on the weekend is simply not the way to approach this industry. It’s not rocket science, it’s just working hard. Fortunately for this group there are not many of those guys that subscribe to MBSLive. "
Michael Ullmann  :  "Forget the re-harp just open it to those that are not fannie/freddie owned and we will all have immeadiate business. From 2005-2007 I was offered 10 bps extra to put customers into alt-a products the pricing was the same so I put lots of clients into that program. At the time I was at hsbc, but the same was true at Wells etc. as far as getting an extra 10bps. "
Steve Chizmadia  :  "I could see re-harping happen if rates limit the pre-pay speeds and rates in the 5's will certainly limit them and restrict virtually all people who did a harp refi from benefitting from another if they closed in the last 2-3 years"
Jason Harris  :  "Joe...letting in non-fannie borrowers would be huge....I am not sure if FHFA is allowed to do that or if it takes some kind of congressional action? It sounds as if you are thinking about "re-harping"...that would also help but it probably messes with MBS investors minds too much to happen....but who knows"
Matthew Graham  :  "Andrew, It's not just supply and demand, though that is a factor at times. You can, of course, have more buyers than sellers but if the market isn't liquid, prices could still go down in that scenario. Imagine you are the only person on the block that sells those delicious mini oranges they have at Costco right now. You're the only seller so you can charge whatever you want. Imagine everyone else in chat wants to buy those oranges. You list your price and we offer our bidding price. In an"
Jason Harris  :  "Unless they allow for non-Fannie deals to be added I am not sure if Harp 3 helps with rates at or much higher than current levels....certainly would not expect a large waive"
Jason Harris  :  "It would seem the herd will be further trimmed in 2014....makes being really good at what you do even more important"
Joe Moran  :  "If Mel Watt gets confirmed of FHFA we'll see if Harp 3.0 comes out. that will lift volumes. "
Joe Moran  :  "that's why all these big banks like chase and wells along with all the smaller lenders have laid people off. "
Matthew Graham  :  "being down 55% is pretty much like "falling to the lows." Being down 100% would be "zero refis." There are always "some" and the 55% drop makes that "some" about as low as it has been in the past few years. http://www.mortgagenewsdaily.com/data/mortgageapplications.aspx"
Jason Harris  :  "I would have thought we would be down more than 55%....if I recall this time last year was exceptionally stellar for refis...not so bad "
Joe Moran  :  ". On a four-week moving average basis, refinance activity has declined by 2.6% over the past month and it is lower by 55% from this time one-year ago. "
Andrew Haynes  :  "still dont understand why it is called a "sell off"? isn't more just a change in supply (less) that has cause MBS prices to drop?"
Ray J  :  "so, light volume technical/defensive trading ahead of the holidays, or what?"
David Rudnick  :  "I hate the standard pre thanksgiving crappout!"
Matthew Graham  :  "NP. And to your credit, the general phenomenon of "pulling up stake" for the long weekend has been taking a toll on liquidity, and it has magnified the existing amount of negative price action into something worse than it otherwise might be."
Brian Bockholdt  :  "thx MG"
Matthew Graham  :  "And yes Nate, 7yr auction contributing."
Matthew Graham  :  "so if shorts didn't want to hold their positions, they'd be buying and rates would fall"
Matthew Graham  :  "positions can be long or short"
Brian Bockholdt  :  "MG... isn't a lot of this just a selloff before the holiday weekend because people don't want to hold they're position over the weekend? "
Nate Miller  :  "7-yr note auction contributing?"
Steven Stone  :  "last day before a holiday - the b team is running the desk today"

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