For two days in a row, the Fed hasn't had a Fannie/Freddie 30yr buying operation, and that's been painfully evident in the underperformance of MBS compared to Treasuries.  In addition, the nature of the rally is more beneficial for Treasuries in the first place. 

What makes a rally "more beneficial for Treasuries?"  Almost anything really.  MBS don't really care for movement.  They're at their best when Treasuries are holding still or at least moving mildly and predictably.  So right off the bat, the more volatile movements seen so far in December haven't been MBS-friendly. 

Beyond that, when a rally is driven by Europe, the most direct spillover to domestic markets is in Treasuries.  MBS are therefore somewhat removed.  Treasuries were also in line ahead of MBS to benefit from the strong 10yr Auction this afternoon.  It took markets a few minutes to reveal their bias following that auction, but once it happened, bonds rallied well for the rest of the afternoon, ultimately resulting in numerous well-earned reprices.

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
100-28 : +0-07
FNMA 3.5
104-01 : +0-06
FNMA 4.0
106-17 : +0-02
2 YR
0.5719 : -0.0441
10 YR
2.1710 : -0.0420
30 YR
2.8370 : -0.0320
Pricing as of 12/10/14 4:38PMEST

Today's Reprice Alerts and Updates
A recap of Alerts and Updates provided to MBS Live subscribers.
2:16PM  :  Getting Into More Legit Reprice Potential Now
12:59PM  :  Back to Neutral; 10yr Auction Preview
9:57AM  :  And Now Regaining That Lost Ground
9:35AM  :  Losing Some Ground after Quiet Overnight Trading; What's With the Big Drop in MBS?

MBS Live Chat Highlights
A recap of featured comments from the Live Discussion on the MBS Live Dashboard.
Hugh W. Page  :  "correct"
Jason York  :  "on a USDA loan, you have to count student loan payments, even if they are deferred, correct?"
Matthew Graham  :  "here's another chart that's useful in addition to the one KM linked: "
Kent Mikkola, NMLS 353976  :  "FH -"
Frank Hanna  :  "June 2009 any idea on the AVG 30yr fnma?"
Matthew Graham  :  "Interesting post-auction money-shuffle. May have to do with the imbalances between directs and indirects. 10's went on sale at first, then the "direct bidder" type accounts picked up some of the inventory they missed out on at auction."
Matthew Graham  :  "RTRS - U.S. 9-YR 11-MO NOTES BID-TO-COVER RATIO 2.97, NON-COMP BIDS $39.71 MLN"
Matthew Graham  :  "RTRS - U.S. SELLS $21 BLN 9-YR 11-MO NOTES AT HIGH YIELD 2.214 PCT, AWARDS 94.97 PCT OF BIDS AT HIGH"
Matthew Graham  :  "bottom line: 2.5+ is OK on BTC, expected yield 2.215. Indirects over 50% is stellar, average is 44-ish"
Matthew Graham  :  "
MBS Live Update Issued
Back to Neutral; 10yr Auction Preview"
Victor Burek  :  "mg, auction preview?"
Matthew Graham  :  "Where are those lenders who priced into the dip this morning?! Bout time, eh?"