Eurozone contagion made an appearance today in much the same way it did for nearly all of 2010-2012.  This time around, it's Portugal's Banco Espirito Santo causing problems for Portugal's sovereign borrowing costs.  This in turn drove flights-to-safety in more stable EU countries.  The posterchild for such countries is Germany, and as goes Germany's bond market overnight, so goes the US Treasury market, most of the time.

Last night was no exception and as as German Bunds approached their lowest levels--well--ever, Treasuries rallied to their best levels since June 2nd.  When the rally was over in Germany, it was over for Treasuries as well.  No objection from Treasuries there as they were just as well to get ready for the week's last auction in the afternoon. 

Despite the weakening from the morning hours, bond markets were still in stronger shape come time for the 30yr Bond Auction.  The results were slightly weak, but not too bad compared to the typical weak 30yr auction (they can be all over the place in terms of how far the fall from expectations and previous averages).  That kept the selling pressure intact for just a bit longer, but bond markets, including MBS, were able to hold their ground without dipping into negative territory.

Visually, MBS will soon be in negative territory as tonight is "the roll" for Fannie and Freddie 30yr Fixed coupons.  That means that the indicative prices for those MBS will no longer be based on July's coupons and instead be based on August's, which currently trade lower in price.  That switch happens after the close today, making it seem as if prices have fallen by an amount equal to the difference in the two coupons.

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
98-18 : +0-05
FNMA 3.5
102-20 : +0-07
FNMA 4.0
105-27 : +0-05
2 YR
0.4601 : -0.0399
10 YR
2.5359 : -0.0091
30 YR
3.3698 : +0.0098
Pricing as of 7/10/14 4:29PMEST

Today's Reprice Alerts and Updates
A recap of Alerts and Updates provided to MBS Live subscribers.
2:30PM  :  Selling Pressure Leveling-Off; Reprice Risk Waning
1:18PM  :  ALERT ISSUED: Losing Ground After 30yr Auction; Negative Reprice Risk Increasing
11:38AM  :  ALERT ISSUED: MBS at Lows of the Day; Negative Reprice Risk on Horizon
9:08AM  :  Jobless Claims Schmobless Claims. Portugal Moving Bond Markets... Wait, What?

MBS Live Chat Highlights
A recap of featured comments from the Live Discussion on the MBS Live Dashboard.
Jeff Anderson  :  "I've been patiently waiting for the post supply rally. (tapping my foot.....)"
Matthew Graham  :  "lucky guess"
Victor Burek  :  "Santelli gave it a B-"
Matthew Graham  :  "Santelli's probably feeling a B-"
Matthew Graham  :  "C+"
Matthew Graham  :  "RTRS - U.S. 29-YEAR 10-MONTH BOND BID-TO-COVER RATIO 2.40, NON-COMP BIDS $7.75 MLN"