Bond markets came into the domestic session in slightly weaker territory owing largely to losses that occurred right at the start of the overnight session.  10yr yields were dragged up to 2.322 as Asian markets had their first chance to react to yesterday's FOMC Announcement in a meaningful way.  Weakness remained intact despite a nice rally in German Bunds.

Following the big GDP announcement, domestic bond markets were weaker for a few split seconds, but quickly began improving as investors sorted out the complex implications of 3 years worth of GDP revisions.  Long story short, the past 3 years were actually a bit weaker than initially reported--a fact that's benefited mostly the longer end of the yield curve.

That means that 10 and 30yr yields are in positive territory, while the shorter duration Treasuries are in negative territory.  MBS are just long enough (in terms of duration) to make the 'positive territory' cut. 

The discrepancy in performance based on duration makes sense considering this morning's data.  On one hand, the inflation-related components of the GDP data make a stronger case for an earlier rate hike (the Deflator was up 2.0 vs 1.5 forecast).  This puts upward pressure on short term rates.  On the other hand, the negative net revisions make a case for global growth concerns in the long term.  This puts downward pressure on longer term rates. 

The net effect is increased volatility and uncertainty about the near term path.  It continues to be the case that 2.26% or thereabouts, is acting as resistance (aka: floor) for 10yr yields.  Getting through that floor would be the first step to getting the rally back on track.


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
100-02 : +0-02
FNMA 3.5
103-10 : +0-01
FNMA 4.0
106-01 : +0-01
Treasuries
2 YR
0.7350 : +0.0270
10 YR
2.2720 : -0.0180
30 YR
2.9550 : -0.0460
Pricing as of 7/30/15 11:34AMEST

Morning Reprice Alerts and Updates
A recap of Alerts and Updates provided to MBS Live subscribers.
10:43AM  :  ALERT ISSUED: Early Negative Reprice Considerations
8:54AM  :  Bond Markets Weaker After GDP, but now Back in The Green

Live Chat Featured Comments
A recap of featured comments from the Live Discussion on the MBS Live Dashboard.
Brian McFarlane  :  "that's 4 major lenders exiting MSA's in one week. Seems like the PHH fine is really spooking lenders"
Sung Kim  :  "Seems like a big deal"
Brian McFarlane  :  "interesting to see in the MND news clip that Prospect is also exiting MSA's"
Matthew Graham  :  "The extent to which it accounts for the positivity is less clear. We've been tracking along fairly closely with equities since the NYSE open, and even before that to some extent (post-GDP volatility notwithstanding) "
Matthew Graham  :  "That's only ever something we can conclude/deduce based on trading and the time of month. So yes, very likely. "
John Tassios  :  "Month end buying on longer end MG?"
Matthew Graham  :  "RTRS- US Q2 BUSINESS INVENTORY CHANGE CUTS 0.08 PERCENTAGE POINT FROM GDP CHANGE"
Matthew Graham  :  "RTRS- US Q2 PCE PRICE INDEX +2.2 PCT (CONS +2.0 PCT) VS Q1 -1.9 PCT (PREV -2.0 PCT); CORE PCE +1.8 PCT (CONS +1.6 PCT) VS Q1 +1.0 PCT (PREV +0.8 PCT)"
Matthew Graham  :  "RTRS- US ADVANCE Q1 GDP DEFLATOR +2.0 PCT (CONS +1.5 PCT) VS Q1 +0.1 PCT (PREV -0.1 PCT)"
Matthew Graham  :  "RTRS- US Q2 CONSUMER SPENDING +2.9 PCT VS Q1 +1.8 PCT (PREV +2.1 PCT); DURABLES +7.3 PCT VS Q1 +2.0 PCT (PREV +1.3 PCT)"
Matthew Graham  :  "RTRS- US ADVANCE Q2 GDP +2.3 PCT (CONSENSUS +2.6 PCT) VS Q1 +0.6 PCT (PREV -0.2 PCT); FINAL SALES +2.4 PCT (CONS +3.0 PCT), Q1 -0.2 PCT (PREV -0.6 PCT)"
Victor Burek  :  "The final GDPNow model forecast for real GDP growth (seasonally adjusted annual rate) in the second quarter of 2015 was 2.4 percent on July 27, unchanged from July 17. "