As we've discussed in the past, bond rallies that are fueled by geopolitical risk require constant feeding if they're to survive and thrive.  In other words, the geopolitical situation has to continue deteriorating in order for the rate rally to continue. 

With that in mind, beginning as early as Friday afternoon, headlines suggested a deceleration in risk.  Taken together with events this morning and there's at least a lack of acceleration.  Bottom line, things may not be getting rapidly better around the globe, but they're not materially worse over the weekend. 

Markets are doing a good job of reflecting that nuanced situation.  Treasuries have lost some ground, but certainly haven't undergone any major, volatile reversal.  If anything, 2.44% in 10yr yields has been holding up well as a supportive ceiling so far today, even while stocks are rallying impressively. 

MBS are outperforming for the first time in August (Treasuries are the primary beneficiaries of geopolitical risk, so when the geopolitical rally fades, they tend to be the primary victim of the weakness as compared to MBS).  Fannie 3.5s are moderately improved while 10yr Treasuries are moderately weaker.

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 : +0-01
FNMA 3.5
102-09 : +0-02
FNMA 4.0
105-13 : +0-00
2 YR
0.4440 : +0.0040
10 YR
2.4290 : +0.0140
30 YR
3.2380 : +0.0120
Pricing as of 8/11/14 11:34AMEST

Morning Reprice Alerts and Updates
A recap of Alerts and Updates provided to MBS Live subscribers.
9:28AM  :  Bond Markets Battle Back After Weaker Overnight Trading

Live Chat Featured Comments
A recap of featured comments from the Live Discussion on the MBS Live Dashboard.
Ted Rood  :  "haven't seen one for quite a while, but don't use LP that much, JY"
Jason York  :  "does LP give appraisal waivers much, on a R/T refi,65% LTV?"
Matthew Graham  :  "I think last Friday's rumor was as much about the close of European bond markets as anything. That headline sounded mighty weird anyway. "Oh what, THESE troops? These troops were just doing some tests, buddy. No need to stress, buddy!""
Sung Kim  :  "so if the last friday's rumor was squashed with this, and we have no move in equities or bonds, so what's really behind the volaitlity?"
Matthew Graham  :  "Some headlines circulating suggesting last Friday's announcement that Russia is/was done with military tests didn't really mean anything. NATO official saying 'high probability' that Russia could intervene militarily in eastern Ukraine and that he sees no sign of Russian troop withdrawal. "