MBS Live: MBS Morning Market Summary
Treasuries were only moderately weaker overnight despite the potential for a "QE off" move after yesterday's budget deal announcement  ("QE off" connotes investors moving out of bonds and even out of stocks to a lesser extent, due to increased chances that Fed accommodation will be declining sooner vs later).  That stands to reason somewhat as international markets are less likely to trade US-specific data as the US traders.  That logic played out in the early domestic session as Treasuries weakened at a slightly faster pace, moving up to yesterday's highs in 10yr yields. 

Both stocks and bonds lost ground into the domestic stock market open, but Treasuries and MBS held their ground from the start of the Fed's daily Treasury buying operation.  Fannie 4.0s have leveled off from there, holding just over the lows of the day.  That stability is fairly impressive considering the normal inclination for weakness ahead of Treasury auction supply (10yr Auction happens at 1pm).
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
95-17 : -0-08
FNMA 3.5
99-31 : -0-07
FNMA 4.0
103-21 : -0-04
FNMA 4.5
106-15 : -0-04
GNMA 3.0
96-21 : -0-09
GNMA 3.5
101-06 : -0-05
GNMA 4.0
104-15 : -0-05
GNMA 4.5
107-02 : -0-05
95-05 : -0-08
99-25 : -0-07
103-14 : -0-04
106-10 : -0-03
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.

10:50AM  :  Bouncing Along Weakest Levels; Reprice Risk Contained for Now
Fannie 4.0s are down 6 ticks on the day, and roughly four of those have come since the first rate sheets of the day. That puts us right on the edge of entering negative reprice risk territory for the most price-sensitive lenders, but support is holding so far. There is no data and no events behind the move other than potentially the trading of yesterday's budget headlines. 103-19 in Fannie 4.0s would be where negative reprice risk picks up.
9:16AM  :  Just Slightly Weaker; Surprisingly Mild Reaction to Budget Headlines
An hour into domestic trade and MBS are only 3 ticks weaker in Fannie 4.0s at 103-23. 10yr yields are a similarly tame 2bps higher at 2.8188, very much within yesterday's trading range.

While current levels aren't necessarily indicative of the rest of the day, it would have been fair to expect more weakness by now, given the attention paid by the FOMC to fiscal policy. To be blunt, the Fed has repeatedly blamed congress, at least in part, for the Fed's own hesitance to curb asset purchases.

Although legislation isn't passed officially, that's a formality at this point. Thus, we wouldn't be surprised to see market participants upgrading possibilities of a December taper. If that's the case, we're not seeing it traded too terribly much, though the day is young.

It does look like it's factor due to the discrepancies between the overnight session and early domestic trading. Treasuries didn't follow German Bunds lower in yield overnight at all--something they typically do. Then they experienced their sharpest dose of weakness right around the time early domestic trading gets underway. Long story short, US markets are reacting more to US-specific news. No surprise there. The only surprise is that it hasn't had more of an impact yet.

There is no significant economic data on tap this morning, but 10yr Treasuries will be auctioned this afternoon with results reported 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.

Michael Gillani  :  "Wow, Stonegate pricing is almost 30 bps worse than yesterday's rate sheet??"
Jason York  :  "I would say with a good LOX, letter from employer, and showing YTD earnings increase YOY, you could have a very strong case"
Jason York  :  "per FHA - Commission income earned for less than one year is not considered effective income. Exceptions may be made for situations in which the borrower’s compensation was changed from salary to commission within a similar position with the same employer. A borrower may also qualify when the portion of earnings not attributed to commissions would be sufficient to qualify the borrower for the mortgage."
john murphy  :  "As an UW I would assume that the Co's move to commission is NOT intended for employee to remain at same level of earnings or higher. Sounds like a comp expense reduction move."
Christopher Stevens  :  "My u/w said need to wait two years because the past guaranteed salary is not indicative of potential future commission earnings."
Victor Burek  :  "have a client that has worked for same company for about 5 years, she was salary, but earlier this year she was changed to 100% commission. Do we have to wait 2 years to use that income, or since it is with same company, can we make it work now?"
Michael Gillani  :  "Just saw a headline from the Labor Dept. that the number of people quitting their jobs is at a 5 yr high. If I quit my job and then someone else is hired, is that considered a job added?"

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