10yr yields are up just more than 7bps to 1.75%.  That's bad in the sense that 1.70 is an inflection point that would have been nice to hold, but still OK in the sense that 1.84 is much more important.  Minutia aside, even the strongest long-term rallies have to have some down days periodically.

Back to minutia...

What's up with this move?  Primarily, it's a factor of overblown reactions to Greek drama in Europe.  News came out yesterday that Greece would be trying to strike a deal with creditors, but it was after the European close.  That left the brunt of the reaction for today's European session, and there was no doubt that it centered on Greece as the country's 3yr debt plunged 300bps.  For context, that would be similar to US 10yr yields dropping 30bps in 2 hours, something we may never see in our lifetimes.

It's not that the entire world hangs on every last piece of news out of Greece.  In fact, that phenomenon is much less of an issue this time around.  The bigger issue is that Greek drama is hitting an incredibly illiquid market for sovereign debt in Europe and the US. 

Strength in Greek debt equates to some obligatory level of weakness in German debt.  In today's case, it was a whopping rise from .31 to .35 in Germany's 10yr Bund.  That might seem like a small change, but in terms of percent-change, it would be like US 10yr yields moving up to 1.86 today as opposed to the 1.75 mentioned above. 

At any rate, the point is that the news imparts momentum, and markets take it a bit farther than they otherwise might because of the illiquid trading environment.  Momentum is its own justification. 

Fortunately, MBS are doing what they're supposed to do and holding their ground quite well against the Treasury weakness.  In terms of the rate sheet implications (8 ticks in Fannie 3.0s equating to .25 in price on rate sheets, and thus roughly 0.033% in rate), MBS are doing twice as well as 10yr Treasuries.

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
103-06 : -0-08
FNMA 3.5
105-17 : -0-05
FNMA 4.0
107-03 : -0-02
2 YR
0.4921 : +0.0241
10 YR
1.7490 : +0.0747
30 YR
2.3370 : +0.0800
Pricing as of 2/3/15 12:51PMEST

Morning Reprice Alerts and Updates
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9:25AM  :  This Broken Record Still Plays Music--In this Case, It's Greek

Live Chat Featured Comments
A recap of featured comments from the Live Discussion on the MBS Live Dashboard.
Matthew Graham  :  "It's very scary! http://mndne.ws/1LIefRL"
Matthew Graham  :  "Because of all that inflation! Look out!"
Matthew Graham  :  "RTRS- U.S. DEC FACTORY ORDERS -3.4 PCT (CONSENSUS -2.2 PCT) VS NOV -1.7 PCT (PREV -0.7 PCT)"
John Rodgers  :  "Its actually the VA Loan Analysis and it should be in all of your LOS'. If you get AUS or manual approval over 41% DTI then you need 120% over residual requirement for family size and region. Active duty living near base can reduce residual requirement by 5%. "
aaron meyer  :  "is there a good worksheet to determine resid. income?"
Victor Burek  :  "seen approvals in the 70's, its all residual income"
Victor Burek  :  "there is no max dti"
John Tassios  :  "what is max VA DTI allowed for approve / eligible, 688 FICO - is it 55% back end?"
John Tassios  :  "MG, good point on your quote " (MBS) underperformance now is just potential outperformance in the future when ( TSY )rates stabalize or bounce higher." Double, Thumbs Up !! "