With and without this morning's economic data, bond markets have erred on the side of weakness so far today.  The only report significantly out of line with forecasts--a super weak, but possibly weather-related read on Industrial Production--failed to get trading levels back into positive territory despite having a positive effect.

The other data was tepid or otherwise unimportant.  Moreover, Industrial Production drew the only noticeable volume-based reaction.  Consequently, being in weaker territory speaks to some level of predisposition.  Beyond that, bond markets have been fairly well-connected with equities since the cash open at 9:30am. 

All that said, the weakness isn't severe.  MBS are back at yesterday's lows.  Treasuries haven't broken yesterday's high yields, and 10's are just over 1bp higher.  There are no other scheduled reports today and most of the meaningful trading has already taken place, both because of the weather in NYC and the 3-day weekend.

Why do 3-day weekends running Sat-Mon affect Friday on Wall Street?  The same reason they affect Friday's in any other profession where people have the ability to take days off or leave early.  An article in CNBC this morning summed up a reminder I occasionally give on days like today, about traders being real people.

For the record, the typical Wall Street guy is not Jordan Belfort, the "Wolf of Wall Street." The typical Wall Street guy is married with two kids. He coaches his son's Little League team on the weekend and likes to go out once or twice a week with his friends to blow off steam.

To be sure, staffing levels would be affected even without the winter storm.  This afternoon is more likely to drift in terms of trading levels.  That can be slightly weaker or stronger or sideways, but nothing extreme.  The only catch is that MBS are already right on the doorstep of negative reprice risk, so some negative drifting could cause a few more than the one we've already seen.

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
96-14 : -0-08
FNMA 3.5
100-22 : -0-08
FNMA 4.0
104-05 : -0-07
2 YR
0.3187 : +0.0037
10 YR
2.7428 : +0.0068
30 YR
3.6952 : +0.0102
Pricing as of 2/14/14 12:13PMEST

Morning Reprice Alerts and Updates
A recap of Alerts and Updates provided to MBS Live subscribers.
11:29AM  :  ALERT ISSUED: MBS Hit New Lows; On The Edge of Negative Reprice Risk
9:30AM  :  Industrial Production Much Weaker; Weather Cited; Bonds Rally Anyway
9:07AM  :  Bond Markets Unchanged Overnight, Weaker After CME Open, Data

Live Chat Featured Comments
A recap of featured comments from the Live Discussion on the MBS Live Dashboard.
Matthew Graham  :  "RTRS - U.S. JAN EXPORT PRICES +0.2 PCT (CONSENSUS 0.0 PCT) VS DEC +0.4 PCT (PREV +0.4 PCT)"
Matthew Graham  :  "RTRS- U.S. JAN IMPORT PRICES +0.1 PCT (CONS. -0.1 PCT) VS DEC +0.2 PCT (PREV 0.0 PCT)"
Victor Burek  :  "that doesn't help us"
Matthew Graham  :  ""The severe weather in January contributed to a decrease of 0.8 percent for manufacturing production""
Victor Burek  :  "and how do they know the weather decreased it .8?"
Matthew Graham  :  "it's what groups reported to Fed. I will enumerate in the forthcoming update. "
Hugh W. Page  :  "Doesn't weather always have some sort of effect this time of year? Don't we seasonally adjust these numbers? "
Brent Borcherding  :  "Hugh, sometimes the weather is worse than the standard adjustment. A worst winter in 10 years might apply."
Hugh W. Page  :  "right but over time your going to get years with less severe weather to balance it out right? "
Christopher Max  :  "quick question in regards to telemarketers...What are they allowed to get for info and not get from the borrower. Does anyone use telemarketers? "
Ira Selwin  :  ""loan Originator" is anyone to person who "performs any of the following activities: takes an application, offers, arranges, assists a consumer in obtaining or applying to obtain, negotiates, or otherwise obtains or makes an extension of consumer credit for another person...""
Ira Selwin  :  "so if a telemarketer does any of that - they need to be licesensed"
Ira Selwin  :  ""assists a consumer" is the most troubling term - as they don't define that."
Nathan Stotlar  :  "So let me get this straight. Wells is doing FHA down to a 600 and that is them "tiptoeing" back into subprime??"
Dan Clifton  :  "Nathan, no, for wells that is a headlong plunge"
Sung Kim  :  "i thought they were already doing them to 580. M&T, PNC, etc., already do them down to 580 no?"
Nathan Stotlar  :  "If wells is selling this to FHA, then are THEY really doing "subprime"? SK - Yes many will go down to a 600 with an AUS approval, but most will downgrade to a manual underwrite and require "compensating factors"."
Ira Selwin  :  "remember, they are using the "subprime" definition only in regards to FICO score. So do take that term with a grain of salt. "
Ira Selwin  :  "Maybe more "non-prime" borrower, but not a subprime product"
Christopher Stevens  :  "Wells looking to get info and guidelines for non-qm lenders"