Bond markets had moved into a defensive position on Friday in order to account for geopolitical fallout after Sunday's referendum in Crimea.  After the referendum overwhelmingly passed, the fallout has been less dramatic than markets may have been expecting.

While the US has already moved to impose sanctions on Russia (as expected), it has only amounted to a war of words and money.  Military involvement was part of the concern that had been fanning the bond market rally, and it looks increasingly less likely at the moment.  The more that continues to be the case, the more bond markets will have a significant motivation to unwind much of last week's rally.

The geopolitical market reaction doesn't exist in a vacuum though.  Data is more prevalent this week and we had some this morning in the form of  the Industrial Production report (there were other reports as well, but not market movers).  It came out stronger than expected and added to the suggestion that weather hurt economic data in January, but likely eased in February. 

Treasuries are pushing against their weakest levels of the morning while MBS are about mid-range, and only 2 ticks weaker on the day in Fannie 4.0s.  The biggest issue at the moment is the inability to challenge Friday's levels.  In fact there's a prominent inflection point between Friday's weakest levels and today's strongest, both in Treasuries and MBS.  The longer we go without challenging that, the harder it will be to break.

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
96-24 : -0-05
FNMA 3.5
100-30 : -0-05
FNMA 4.0
104-11 : -0-03
2 YR
0.3505 : +0.0085
10 YR
2.6759 : +0.0309
30 YR
3.6180 : +0.0310
Pricing as of 3/17/14 12:10PMEST

Morning Reprice Alerts and Updates
A recap of Alerts and Updates provided to MBS Live subscribers.
9:45AM  :  Moving Back Toward Lows After Industrial Production Data; Stronger Stock Open
9:12AM  :  Bond Markets Weaker Overnight, but Recovering Into Domestic Session

Live Chat Featured Comments
A recap of featured comments from the Live Discussion on the MBS Live Dashboard.
John Sheadel  :  "It's looking like we're going to be down another quarter or so on the 30yr FNMA 4.0 this morning. Not what I was looking for this morning. "
Christopher Stevens  :  "I'd think market now positioning itself for Fed talk Wednesday. I am certainly interested to see what they do with language regarding 6.5% threshold. "
Jeff Anderson  :  "What's the short version of how the mortgage market would work if they dismantle Fannie and Freddi? More Hope and Change?"
John Sheadel  :  "I think it might shift to Change and Hope, but you might be right. "
Jeff Anderson  :  "And it is a bipartisan bill so all sides will slow how little they know how anything really works. Must be Cynical Monday. Need a 2nd cup of joe. Is it brewe"
Matthew Graham  :  "RTRS - NY FED'S EMPIRE STATE INDEX +5.61 IN MARCH (CONSENSUS +6.0) VS +4.48 IN FEB"
Jon Bodan  :  "really seems that we should have a flight to safety this morning, given the Ukraine vote. ???"
Matt Hodges  :  "JB: you may want to read the Week Ahead - third down on news stream"
Matthew Graham  :  "Looks like it has been a bit anticlimactic so far, at least compared to the build-up. In the same vein as Y2K "
Jon Bodan  :  "Checked it out. Still seems like we're basically going onto Cold War footing with Russia over this. Putin's not going to leave, and will posture that he can go further if he wants. USA/NATO can only waggle fingers, read sternly worded referendums, and saber-rattle without losing face. "
Matthew Graham  :  "Right, so in the analogy, the sources of info leading us to believe it's a cold war scenario would be the modern day analogs of the folks on the news in late 1999 explaining how computers around the world could suddenly think the year was 1000 AD. Of course, things could be different this time, but so far they're not."