If bond markets were left to their own devices today, we may well be seeing a bit of resilience--a modest tempering of the past two days of weakness perhaps.  Instead, MBS and Treasuries have been pulled into slightly weaker territory by European markets and domestic equities.

The first Thursday of the month always stands the chance to deliver some volatility from Europe as the European Central Bank (ECB) and often the Bank of England (BOE) release monetary policy statements and conduct press conferences.  While today's movement in European markets is by no means extreme, German Bunds (the most closely related sovereign debt to US Treasuries) are certainly pushing the pace for weakness.

Treasuries had been doing quite a good job of resisting weakness in Bunds, but equities markets joined the argument at the 9:30am 'cash open' in stocks.  After losing ground (in futures) into the 9am hour, equities came charging back into the cash open (almost a 20 point swing in S&P).  Combined with the weakness in Bunds, this was more than Treasuries could handle and 10's gave up their defensive position at 2.68 to move up to 2.70, but have been leveling-off fairly well there.

MBS continue to stand as the Diet Coke version of Treasuries in terms of movement.  If Treasuries are winning, MBS are winning slightly less.  If Treasuries are losing, MBS aren't losing as badly.  Same story today as Fannie 4.0s are only down 2 ticks compared to the 9 tick loss in 10yr yields.

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
96-29 : -0-07
FNMA 3.5
101-07 : -0-05
FNMA 4.0
104-20 : -0-02
2 YR
0.3274 : +0.0114
10 YR
2.7003 : +0.0323
30 YR
3.6769 : +0.0239
Pricing as of 2/6/14 11:52AMEST

Morning Reprice Alerts and Updates
A recap of Alerts and Updates provided to MBS Live subscribers.
9:40AM  :  ALERT ISSUED: Bonds Push Into Weakest Levels at Stock Market Open
9:11AM  :  Bond Markets Weaker, but Reluctantly so

Live Chat Featured Comments
A recap of featured comments from the Live Discussion on the MBS Live Dashboard.
Matthew Graham  :  "RTRS- US JOBLESS CLAIMS FELL TO 331,000 FEB 1 WEEK (CONSENSUS 335,000) FROM 351,000 PRIOR WEEK (PREVIOUS 348,000)"
Matthew Graham  :  "RTRS - U.S. Q4 NON-FARM PRODUCTIVITY +3.2 PCT (CONSENSUS +2.5 PCT) VS Q3 +3.6 PCT (PREV +3.0 PCT)"
Victor Burek  :  "no wage inflation"
Matthew Graham  :  "RTRS - US DEC TRADE DEFICIT $38.70 BLN (CONSENSUS $36.0 BLN) VS NOV DEFICIT $34.56 BLN (PREV $34.25 BLN)"
Jeff Anderson  :  "GM, all. So the u/e rate and participation rate could both have big drops due to the ending of the long term u/e benefits getting cancelled. Awesome. Let the recovery continue."
Roger Moore  :  "for initial disclosures? if not, do you have a good company that you use? Please advise. "
Steve Stone  :  "we use suredocs by alamode...easy to use and its a flat fee per year"
johnmurphy  :  "RM we use doc-u-sign with e3 LOS. works well."
Ted Rood  :  "Guess we don't have to worry about the bother of switching to the 3.5 coupon at this juncture."
Dave Pressel  :  "guys, who do you use for construction loans (just the construction) -- both regional and national?"
Jason Anker  :  "100% in house, dont know any quality wholesale lenders in that market"
Brian Bockholdt  :  "suddenly 2.7 is so ugly.. couple weeks ago it was heaven"