Treasuries were significantly weaker today as oil, Europe, and equities all bounced higher.  The move was led by a reversal in European bond markets in the morning and by a weak 5yr Treasury auction in the afternoon.  In fact, until the auction, bonds simply looked to be giving back yesterday's Europe-inspired gains.  The fallout from the auction was good for another 3-4 bps of weakness in 10yr yields.

MBS held their ground admirably, but more so in the morning hours.  Before the auction, Fannie 3.5s and 3.0s had managed to hold inside yesterday's range (Treasuries were already well beyond theirs).  All bets were off after the auction.  Treasury yields moved sharply higher and MBS couldn't help but be dragged down.

For what it's worth, volume remained "holiday light," with Treasury activity running right around 50% of the averages from before last week.  The caveat is that things picked up a bit more today than we might have expected for the holiday week.  This could add some significance/foreshadowing to today's weakness.

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
99-20 : -0-13
FNMA 3.5
102-27 : -0-09
FNMA 4.0
105-17 : -0-06
Treasuries
2 YR
1.0950 : +0.0360
10 YR
2.3090 : +0.0840
30 YR
3.0370 : +0.0970
Pricing as of 12/29/15 5:08PMEST
Today's Reprice Alerts and Updates
A recap of Alerts and Updates provided to MBS Live subscribers.
1:11PM  :  ALERT ISSUED: Bad 5 Year Auction; Weakest Levels; More Reprice Risk
10:24AM  :  ALERT ISSUED: Negative Reprice Risk Increasing
MBS Live Chat Highlights
A recap of featured comments from the Live Discussion on the MBS Live Dashboard.
Matthew Graham  :  "C-"
Matthew Graham  :  "RTRS - HIGH YIELD AT LATEST 5-YEAR NOTE SALE WAS 1 BASIS POINT ABOVE ITS 1 P.M. WHEN-ISSUED LEVEL - REUTERS DATA"
Matthew Graham  :  "RTRS - U.S. 5-YEAR NOTES BID-TO-COVER RATIO 2.32, NON-COMP BIDS $45.90 MLN"
Matthew Graham  :  "RTRS - U.S. SELLS $35 BLN 5-YEAR NOTES AT HIGH YIELD 1.785 PCT, AWARDS 27.37 PCT OF BIDS AT HIGH"
Jason York  :  "and this was a manual UW"
Jason York  :  "Ted, the caregiver should have a letter from the Dept of VA stating her income. I used that letter, partnered with the fact that the veteran was 100% disabled, and that wouldn't improve, as the reason for continuance"
Jason York  :  "Veteran was 100% disabled, so his wife received income to help take care of him"
Ted Rood  :  "Did you have to prove continuation?"
Jason York  :  "yes, I have"
Ted Rood  :  "anyone ever use VA paid spousal care income when qualifying for a VA loan for disabled vet?"