MBS Live: MBS Morning Market Summary
The ADP Employment Report, as expected, was the biggest factor in bond market movement this morning.  After the numbers hit at 8:15, volume popped and prices tanked.  For the sake of comparison, only the last few NFP releases have prompted more volume over a 5 minute period from the release of data.  That's made all the more impressive by the fact that floor trading at the CME doesn't even open until 8:20am. 

Long story short, markets traded the ADP data, and heavily.  This stands to reason due to its correlation with NFP (granted, it doesn't correlate perfectly, but better than anything else).  Fannie 4.0s fell from 103-23 to 103-09.  Later in the morning, weaker ISM data helped solidify a move back to 103-14 and they've held between there and 103-16 ever since.  So even after the modest bounce back, Fannie 4.0s remain about 3/8ths weaker on the day, and many lenders' rate sheets are at least half a point weaker.
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
95-14 : -0-13
FNMA 3.5
99-28 : -0-12
FNMA 4.0
103-16 : -0-11
FNMA 4.5
106-05 : -0-09
GNMA 3.0
96-16 : -0-15
GNMA 3.5
101-00 : -0-12
GNMA 4.0
104-11 : -0-14
GNMA 4.5
106-30 : -0-07
94-31 : -0-13
99-21 : -0-12
103-06 : -0-10
105-31 : -0-09
Pricing as of 11:05 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.

10:23AM  :  New Home Sales Stronger Than Expected
- New Home Sales 444k vs 428 forecast, 354k previously
- Single Family Sales +25.4 pct, biggest rise since 1980
- Median prices $245.8k, down 0.6 pct year over year

Market Reaction: Taken in and of itself, this would have a negative impact on MBS prices, but the ISM data out at the same time is a more potent market mover. As such, bond markets are slightly improved since 10am, but this New Home Sales data has likely limited the positive bounce.

Sales of new single-family houses in October 2013 were at a seasonally adjusted annual rate of 444,000, according to estimates released jointly today by the U.S. Census Bureau and the Department of Housing and Urban Development. This is 25.4 percent (±19.2%) above the revised September rate of 354,000 and is 21.6 percent (±15.6%) above the October 2012 estimate of 365,000.

The median sales price of new houses sold in October 2013 was $245,800; the average sales price was $321,700. The seasonally adjusted estimate of new houses for sale at the end of October was 183,000. This represents a supply of 4.9 months at the current sales rate.
10:17AM  :  ECON: ISM Non-Manufacturing Weaker Than Expected
- ISM Services PMI 53.9 vs 55.0 forecast, 55.4 previously
- Employment 52.6 vs 56.2 previously
- Employment lowest since May

- Market Reaction: helping to stem the losses inspired by this morning's ADP data, though it's only been worth 2bps in terms of 10yr yields so far and 7 ticks for Fannie 4.0s.

"This indicates continued growth at a slower rate in the non-manufacturing sector. The Non-Manufacturing Business Activity Index decreased to 55.5 percent, which is 4.2 percentage points lower than the 59.7 percent reported in October, reflecting growth for the 52nd consecutive month, but at a slower rate. The New Orders Index decreased slightly by 0.4 percentage point to 56.4 percent, and the Employment Index decreased 3.7 percentage points to 52.5 percent, indicating growth in employment for the 16th consecutive month, but at a slower rate. The Prices Index decreased 3.9 percentage points to 52.2 percent, indicating prices increased at a slower rate in November when compared to October. According to the NMI®, 11 non-manufacturing industries reported growth in November. Respondents' comments for the most part indicate the non-manufacturing sector is maintaining a steady course of incremental growth and a positive outlook for the upcoming months."
9:10AM  :  Bond Markets Reeling After ADP Data; Waiting on ISM
Overnight volatility was minimal with 10yr yields holding under 2.81 until the start of the domestic session. The ADP Employment figures hit at 8:15am coming in at 215k payrolls vs a forecast of 173k. Bond markets immediately sold off and have only leaked lower since then.

Fannie 3.5s are off the radar now and we'll be switching to follow 4.0s today (down 18 ticks to 99-22). Fannie 4.0s are down 17 ticks at 103-10. 10yr yields are up more than 7 ticks at 2.8479. S&Ps are off 10 points but did most of their selling before the data.

There's more to come as well. ISM Non-Manufacturing is an important report coming up at 10am and can have a big impact. If it's similarly stronger than expected, MBS could continue lower. If it's weaker, it could mark the point at which we level off for the day.
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.

Dan Clifton  :  "Andy, it measures how much further bonds can sell off"
Matthew Graham  :  "look under Data and Method of Presentation here: http://www.ism.ws/ismreport/nonmfgrob.cfm"
Andy Pada  :  "what does the ISM employment index measure?"
Michael Gillani  :  "I read that MG and I was prepared for some defensive hedging coming into this week before NFP, but we've seen a massive selloff on Wed and then again Monday and then now again today with some more minor losses yesterday. With all that being said, we may be 200 bps in the whole before NFP even hits from last Wed. I never expected this big of a play in either direction before NFP. Seems excessive."
Joe Moran  :  "just got my first rate sheet and its from wells. 30 year is basically off .50bps in price. "
Gus Floropoulos  :  "me thinks its more like 3"
Brandon Blue  :  "Just wild guess: Are we at 2.9s on 10tr by Friday? Me thinks so...."
Matthew Graham  :  "hurts less if you read and absorbed: http://www.mortgagenewsdaily.com/mortgage_rates/blog/333775.aspx"
Michael Gillani  :  "What hurts here is the massive, unexpected selloff on Wed and Mon which alone equalled a big NFP beat and then now it's piling on with data beats!"
Matthew Graham  :  "yeah, for anyone else who didn't notice, it's "mobile" on the menu above, or simply go to www.mobilembs.com"
Steven M. Sims  :  "does MBS have an app?"
Victor Burek  :  "http://www.adpemploymentreport.com/2013/November/NER/NER-November-2013.aspx"

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