MBS Live: MBS Morning Market Summary
"Exhaustion" was the theme of this morning's commentary, and today's price action is confirming that.  One of the byproducts of exhaustion is a sort of stubborn unwillingness to stray too far from recent trading levels without significant motivation.  Unless something utterly surprising were to happen, the only significant motivation on the horizon is next week's FOMC Announcement. 

Today's movements in MBS and Treasuries so far have both been characterized by "triangles" with higher lows and lower highs.  These are currently pointing smack dab toward the center of yesterday's range.  Pretty boring, but as always, you can never fully expect trading levels to stay boring in financial markets, even if it looks quite likely. 

Lighter volume into the afternoon can always grease the skids for a bit more volatility, but unless it's accompanied by one of those major unforeseen surprises that we aren't likely to get, it will merely be incidental, and not at all indicative of any trend or momentum that means anything when placed next to Wednesday's FOMC.
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
95-10 : +0-03
FNMA 3.5
99-21 : +0-02
FNMA 4.0
103-08 : +0-01
FNMA 4.5
106-05 : +0-00
GNMA 3.0
96-18 : +0-07
GNMA 3.5
100-30 : +0-03
GNMA 4.0
104-06 : +0-00
GNMA 4.5
106-25 : -0-01
95-01 : +0-05
99-15 : +0-03
103-01 : +0-02
106-00 : +0-01
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.

9:18AM  :  Bond Markets Modestly Stronger into AM hours; Stalled Out for Now
The overnight session was inconsequential for Treasuries with no trading ranges tested. Asian hours were stronger. European hours were weaker, and 10yr yields were unchanged at 730am.

From there, bond began rallying as domestic trading picked up. Short-covering met with black-box buying at the 8:20 CME open. The algorithmic support continued through the inconsequential PPI numbers and was exhausted by 9am.

10yr yields experienced all of the above as just under a 2bp drop and Fannie 4.0 MBS as a 6 tick gain. 10's are currently down 1.8bps at 2.859 and Fannie 4.0s are up 5 ticks at 103-12. There are no significant economic reports for the rest of the day.
8:43AM  :  ECON: Producer Prices Slightly Weaker Than Expected; Core Prices on Target
- PPI -0.1 vs 0.0 forecast
- Core PPI +0.1 vs +0.1 forecast
- Year over year Core CPI +1.3 vs +1.4 forecast
- Market Reaction: Bond Markets were trending positively from 7am and PPI did nothing to change that.

The Producer Price Index for finished goods edged down 0.1 percent in November, seasonally adjusted, the U.S. Bureau of Labor Statistics reported today. Prices for finished goods decreased 0.2 percent in October and 0.1 percent in September. At the earlier stages of processing, prices received by manufacturers of intermediate goods declined 0.5 percent, and the crude goods index fell 2.6 percent. On an unadjusted basis, prices for finished goods advanced 0.7 percent for the 12 months ended November 2013.
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.

Jason York  :  "lol, that is what i was thinking, I have a customer that was talking to the builder, and they said they had a lender that could close it by the end of the year, I was honest and told him I wouldn't be able to do it, did I mention that it is a new construction condo, so needs all condo docs and approval as well"
Ted Rood  :  "That's an underwriter's call, but should work."
Nathan Stotlar  :  "how about pre-delivery TR?"
Ted Rood  :  "No so much, JY"
Jason York  :  "would any of yall tell a new buyer that they could close by the end of the year on a conventional 95% purchase of a new contruction condo, when you haven't even started an app, and they don't have a ratified contract yet?"
Hugh W. Page  :  "My impression from what I read is he leans on the "dovish" side but he understands the risks of too much QE in place too long. "
John Tassios  :  "yes VB, he did mention he does not favor foward guidance, and he looks to be a bit of a hawk too. It kind of owrries me if the FED may tilt more to neutral to slightly hawkish with the new voting memeber and the new vice chair"
Victor Burek  :  "isn't the new vice chair guy anti forward guidance?"
Oliver Orlicki  :  "thought the fed said inflation is not of concern"
Matthew Graham  :  "RTRS- U.S. NOV YEAR-OVER-YEAR PPI +0.7 PCT (CONS +0.8 PCT), CORE +1.3 PCT (CONS +1.4 PCT) "
Matthew Graham  :  "RTRS- U.S. NOV PPI EXFOOD/ENERGY +0.1 PCT (CONS +0.1 PCT) VS OCT +0.2 PCT "
Matthew Graham  :  "RTRS- U.S. NOV PPI -0.1 PCT (CONSENSUS UNCHANGED), VS OCT -0.2 PCT "
Victor Burek  :  "still no inflation"
Jeff Anderson  :  "No place to go but up! As long as we don't go down, OSO. GM, all."
Oliver Orlicki  :  "that cnbc headline at 807 is eye opening"

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