There are plenty of big stories right now.  In terms of broader markets, last night's announcement of US air strikes in Iraq was clearly the biggest.  That was the catalyst for a move that ultimately took 10yr yields to 2.349 in overnight trading.  Ongoing headlines surrounding the Ukraine/Russia and Israel/Hamas conflicts are also contributing to volatility.

The big story in the mortgage-specific world is the severe and prolonged level of underperformance on the part of MBS.  In other words, Treasuries are gaining.  MBS are just barely in positive territory.  For instance, 10yr Treasuries are up 10 ticks in price while Fannie 3.5s are just up 2 ticks. 

Of course it's only natural for MBS to gain less ground when bond markets are rallying for geopolitical reasons, but this is a bit excessive.  Not only that, but with the roll coming tonight, the gap between current prices and recent points of reference will only be that much wider.  For instance, the last time 10yr yields were near 2.40%, Fannie 3.5 prices made it to 103-14.  This time around, they're at 102-23, and the roll usually makes for an 8-12 tick drop, meaning they'll be roughly a full point lower by comparison.

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
99-00 : +0-04
FNMA 3.5
102-23 : +0-03
FNMA 4.0
105-27 : +0-02
2 YR
0.4280 : -0.0080
10 YR
2.3860 : -0.0380
30 YR
3.2070 : -0.0280
Pricing as of 8/8/14 11:48AMEST

Morning Reprice Alerts and Updates
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9:46AM  :  Bond Markets Surge Overnight, Dialed Back, but Gaining Again; MBS Underperform Horribly

Live Chat Featured Comments
A recap of featured comments from the Live Discussion on the MBS Live Dashboard.
Matthew Graham  :  "That is usually how it goes. Gain less, lose less "
Michael Gillani  :  "Gotcha. And reversely, if Treasuries were to move back in the other direction for any number of reasons, I imagine MBS would move back the other way without underperformance, right?"
Matthew Graham  :  "Well, considering I wrote that last night and they're already widening, yeah... The more we rally on geopolitics and Europe-related save-haven demand, the more MBS will underperform. Rather than 'catch-up' in that scenario, they'd simply reach a range of maximum underperformance where they'd at least be moving as much as Treasuries, but not necessarily making up ground."
Michael Gillani  :  "MG, I read the Day Ahead and have one question. Do you anticipate the gap between MBS and Treasuries to widen if Treasuries continue to push new lows? Or can we expect or at least hope that MBS will play catch up next week if the bond rally persists?"
Chris Hooker  :  "Still no MBS love"
Matthew Graham  :  "Bloomberg reporting US military aircraft strike on Islamic state artillery -Pentagon "
Victor Burek  :  "Stocks appeared to get a boost after Russian news agency RIA said Russia is seeking to de-escalate tensions with Ukraine. Russia and the West have been tussling over the Kremlin’s support of separatist forces in Ukraine, "
Victor Burek  :  "Blasts are rocking Gaza, smoke is rising over the city, apparently from an Israeli air strike, Reuters reports. This comes after Israeli authorities ordered military to respond to “at least 18 rockets from Gaza” by attacking “terror sites,” the army said."