With UK and Japan bank holidays, cash Treasuries didn't really have an overnight session (London and Tokyo are the hubs for Treasury trading during the European and Asian sessions respectively).  This also affected volume and liquidity in early domestic hours.  In this case, the lack of liquidity made it easier for Treasuries to hold their ground against an onslaught of weakness in German sovereign debt.  10yr Bunds are up a whopping 40bps in 2 weeks! 

With Treasuries outperforming Bunds, the spread between the two narrowed all morning.  Once it hit the narrowest recently levels (1.675%, set at the end of April, if you're curious), Treasuries acquiesced to the European pressure and moved rapidly higher in yield.  The move was exacerbated by corporate debt issuance as the rate-lock process often necessitates Treasury sales.

MBS joined in the move as well.  While we're only down 4 ticks at the moment, we had been up 4 ticks before that, making for a total of a quarter point in weakness from the highs.  To make matters worse, those highs generally coincided with rate sheet print times, leaving most lenders in a position to reprice negatively. 

Economic data and Fed speeches were overlooked.  That said, the data wasn't that interesting in the first place with Factory Orders coming in at +2.1 vs +2.0 forecast.  Chicago Fed Pres. Evans was also rather uninteresting, largely because he's consistently the most dovish Fed speaker, and it's no surprise to hear him calling for a 2016 rate hike, among other accommodative suggestions. 


MBS Pricing Snapshot
Pricing shown below is delayed, please note the timestamp at the bottom. Real time pricing is available via MBS Live.
MBS
FNMA 3.0
101-10 : -0-04
FNMA 3.5
104-14 : -0-02
FNMA 4.0
106-22 : +0-00
Treasuries
2 YR
0.6070 : +0.0080
10 YR
2.1300 : +0.0183
30 YR
2.8580 : +0.0323
Pricing as of 5/4/15 1:27PMEST

Morning Reprice Alerts and Updates
A recap of Alerts and Updates provided to MBS Live subscribers.
12:02PM  :  ALERT ISSUED: Negative Reprices Now Likely
11:20AM  :  ALERT ISSUED: Negative Reprice Risk Increasing
9:34AM  :  US Bond Markets Resilient Despite European Weakness.

Live Chat Featured Comments
A recap of featured comments from the Live Discussion on the MBS Live Dashboard.
Matthew Graham  :  "RTRS- EVANS: ONE COULD ARGUE THAT FED IS NOT ACCOMMODATIVE ENOUGH"
Matthew Graham  :  "RTRS- EVANS: SIGNIFICANT RISKS, FEW BENEFITS TO INCREASING RATES PREMATURELY"
Matthew Graham  :  "RTRS - EVANS: NO SERIOUS COSTS OF MODESTLY OVERSHOOTING INFLATION TARGET"
Matthew Graham  :  "RTRS- EVANS: INFLATION WON'T REACH 2 PCT UNTIL 2018, NEED GREATER CONFIDENCE IT WILL RISE"
Matthew Graham  :  "RTRS- FED'S EVANS: RATE HIKE LIKELY NOT APPROPRIATE UNTIL EARLY 2016"
Travis Waters  :  "It isn't working for me either"
Ben Biscoe  :  "anyone having any issues with optimal blue? getting a service unavailable message in encompass and when i go directly to the website it wont pull up"
Sung Kim  :  "i believe FHA changed their s/e guidelines a couple years ago - if a certain period of time has passed since the last tax filing, p&l and stuff is needed"
Sung Kim  :  "your u/w is correct"
Chip Harris  :  "I have a borrower that is refinancing her FHA and taking ex off. She is a 1099 employee. UW is saying that FHA requires 2014 and YTD P&L which she doesn't have of course. She filed a 2014 extension. I have not seen that guideline before on FHA."
Sung Kim  :  "yes"
Ted Rood  :  "does it continue for 3 years?"
Sung Kim  :  "anyone ever deal with a borrower that receives income from the government's 9/11 victim's fund?"
Matthew Graham  :  "RTRS- U.S. MARCH NONDEFENSE CAP ORDERS EX-AIRCRAFT REVISED TO +0.1 PCT FROM -0.5 PCT"
Matthew Graham  :  "RTRS- U.S. MARCH FACTORY ORDERS +2.1 PCT (CONSENSUS +2.0 PCT) VS FEB -0.1 PCT (PREV +0.2 PCT)"