Bond markets were stronger all day, with every ancillary consideration seeming to help them along.  Right from the start of the overnight session, weaker data out of China got credit for hurting equities and helping bonds.  The equities theme would ultimately dominate the session as S&Ps lost a mighty 20+ points.

Bonds continue displaying a good amount of correlation with stocks and today was a shining example.  Related markets were on board with this as well, particularly Japanese Yen.

The strong correlations remind me of the Eurozone crisis where we could reliably predict that several financial metrics would move in unison.  The reason it's working again right now is likely the same as it was then: "risk-on vs risk-off" trading.  Risk-off trading easily explains just about everything we saw today, including the fact that MBS had a hard time keeping up with Treasuries.

Even so, there was plenty of positivity to lift Fannie 4.0s to their best levels of the year.  10yr yields crushed their previous boundaries though, moving briefly into the high 2.75's before moving back to 2.77-2.78 into the close.  The extent of that crushing looks like it has more to do with the broader "risk-off" environment today.  Stocks would have to put up a repeat performance tomorrow for bonds to even gain half the ground gained today.  There's just not enough motivation for a much bigger move unless the FOMC endorses it by holding off on tapering next week.

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
96-11 : +0-19
FNMA 3.5
100-21 : +0-17
FNMA 4.0
104-03 : +0-14
2 YR
0.3595 : -0.0405
10 YR
2.7772 : -0.0828
30 YR
3.6812 : -0.0778
Pricing as of 1/23/14 4:42PMEST

Today's Reprice Alerts and Updates
A recap of Alerts and Updates provided to MBS Live subscribers.
1:51PM  :  Positive Reprice Potential for More Lenders
10:24AM  :  Bond Markets Head-Fake Higher After Data, but no Follow-Through
8:59AM  :  Bond Markets Stronger Overnight and After Claims Data

MBS Live Chat Highlights
A recap of featured comments from the Live Discussion on the MBS Live Dashboard.
Victor Burek  :  "All-cash purchases accounted for 42.1 percent of all U.S. residential sales in December, up from a revised 38.1 percent in November, and up from 18.0 percent in December 2012. States where all-cash sales accounted for more than 50 percent of all residential sales in December included Florida (62.5 percent), Wisconsin (59.8 percent), Alabama (55.7 percent), South Carolina (51.3 percent), and Georgia (51.3 percent). "
Tom Sawyer  :  "Vic, I wonder how many of the all cash were investment groups?"
Victor Burek  :  "Institutional investor purchases (comprised of entities that purchased at least 10 properties in a year) accounted for 7.9 percent of all U.S. residential sales in December, up from 7.2 percent the previous month and up from 7.8 percent in December 2012."
Tom Sawyer  :  "That actually is large amount considering you had to buy 10 to be counted. If you added the international investors, and institutional buyers together...I wonder what percentage of cash purchases they accounted for? "
Matthew Graham  :  "wouldn't you think most of the all-cash crowd would be investment? "
Hugh W. Page  :  "That 62.5% Cash number for FL is definitely correct in my neck of the woods and it is mostly investor but not all investor."
babyt03  :  "Hugh, you are right on the money for Florida....but take a look at Wisconsin.....59.8%? Wow, the snowbirds there already have their home there."
Jeff Anderson  :  "Right. The Wisconsin surprised me. I expected to see Nevada and Arizona in the top 5."
Hugh W. Page  :  "I think part of it may be risk averse retired folks who are getting zilch on their safe investments, are leery of the stock market and think it makes sense to just go with no debt."
Joseph Daquino  :  "Was that 2.77 break, pretty significant?? Where do we go from here?"
Matthew Graham  :  "the break was at 2.82"
Matthew Graham  :  "this is follow-through. 2.75 is a relatively much larger inflection point than 2.82, so we'll see how yields behave when/if they make it that far."
Matthew Graham  :  "I THINK (could be wrong, but haven't checked yet), that this instance of Jobless Claims covers the NFP survey week. BLS states that the establishment survey typically covers the week that contains the 12th of the month, and last Sunday was the 12th, and today's claims release is for last week, so... "
Jeff Anderson  :  "Isn't it also a spook from corporate earnings? I'd figure they'd just keep lowering estimates to keep things moving along swimmingly."
Josh Stika  :  "The things I learn following this chat...."
Matthew Graham  :  "certainly the stock lever is in play JA."