The big news so far today has been the much-weaker-than-expected ISM Manufacturing data.  While the headline "Purchasing Manager's Index" was still in expansionary territory at 51.3 (anything over 50 connotes expansion), this was far lower than the 56.0 forecast.  It was also the biggest month-over-month drop since 1980.

While the report made some mention of recently cold weather constraining activity, that didn't stop markets from reacting forcefully.  Stocks were more or less demolished, with S&Ps down more than 20 points already.  10yr yields had a pretty steep drop as well, moving from 2.67 before the data to 2.61 a few minutes later.

MBS aren't able to keep up quite that pace when it comes to these big, reactionary, risk-off movements.  But the swing from negative to positive territory still brings them to their best levels since mid November.  Compared to the 17/32nds gain in 10yr Treasury prices, Fannie 4.0s are up only 7/32nds and 3.5s are up 10/32nds.

MBS Pricing Snapshot
Pricing shown below is delayed, please note the timestamp at the bottom. Real time pricing is available via MBS Live.
MBS
FNMA 3.0
97-23 : +0-12
FNMA 3.5
101-28 : +0-10
FNMA 4.0
105-01 : +0-07
Treasuries
2 YR
0.3119 : -0.0281
10 YR
2.6077 : -0.0583
30 YR
3.5632 : -0.0578
Pricing as of 2/3/14 12:00PMEST
Morning Reprice Alerts and Updates
A recap of Alerts and Updates provided to MBS Live subscribers.
10:18AM  :  Bond Markets Surge After Weaker-Than-Expected ISM Data
9:00AM  :  Bond Markets Slightly Weaker; Holding Ground so Far
Live Chat Featured Comments
A recap of featured comments from the Live Discussion on the MBS Live Dashboard.
Matthew Graham  :  "RTRS- ISM REPORT ON U.S. MANUFACTURING SHOWS PMI AT 51.3 IN JANUARY (CONSENSUS 56.0) VS 56.5 IN DEC "
Oliver Orlicki  :  "certainly going to help"
Matthew Graham  :  "RTRS- DROP IN MANUFACTURING NEW ORDERS INDEX IN DECEMBER WAS LARGEST SINCE DEC 1980 "
Jeff Anderson  :  "I heard over the weekend today was supposed to be a decent day for equities with the 1st day of the month and funds investing and that tomorrow would be the real test to see where we may go. Ruh roh."
Matthew Graham  :  ""A number of comments from the panel cite adverse weather conditions as a factor negatively impacting their businesses in January, while others reflect optimism and increasing volumes in the early stages of 2014.""
David Dickens  :  "Are lenders pricing off the 3.5 now?"
Brian Bockholdt  :  "I second Davids question"
Matthew Graham  :  "4.375% can go either way, probably still favoring 4.0 coupons at that rate, but anything being originated at 4.25% is more likely getting slotted into 3.5 coupons. "
Matthew Graham  :  "3.5's are unquestionably a consideration for the lower reaches of rate sheets. As such they bear consideration along with 4.0s as far as reprice risk is concerned. At times like this, I usually set alerts for both the coupons."
Ira Selwin  :  "Still check out your buydowns too. Still some lenders with heavy buydowns from 4.5->4.375->4.25 and beyond."
Christopher Stevens  :  "IMO it's going to take a bit more buying to get a solid 4.250% "
Ira Selwin  :  "I'm still seeing roughly 90 bps or so to go from 4.5->4.375"
Matthew Graham  :  "cheaper from there to 4.25 though. "
Ira Selwin  :  "Yeh about 65ish from 4.375->4.25"
Matt Hodges  :  ".875 from 4.5 to 4.375% and .5 to 4.25%"
Roger Moore  :  "anybody else seeing a lot more Freddie harp action lately vs fannie?"
Ira Selwin  :  "Interestingly yes Roger."