MBS Live: MBS Morning Market Summary
Everywhere we look this morning, there's another reason for bond markets to be heading back into weaker territory after yesterday afternoon's relatively impressive rally.  Right off the bat, the best Jobless Claims numbers since January 2008 are going to hurt, even if they're not associated with tomorrow's more important reading on employment.  If this had occurred during NFP "survey week," the damage would be that much worse.  The strongest ISM Manufacturing report since mid 2011 added similar fuel to that fire at 10am.  Those events marked the main jolts lower in MBS prices this morning, taking both Fannie 3.5s and 4.0s to levels seen just before yesterday's FOMC Announcement.  There's no additional data set for today and with the ECB's announcement/press conference out of the way earlier this morning, tomorrow's NFP becomes the only consideration (more so than it already was).  10yr yields could quickly move to 2.5 or 2.85 in a 5 minute time window if tomorrow's data is more than 50k from the 184k consensus in either direction.
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
96-12 : -0-23
FNMA 3.5
100-10 : -0-20
FNMA 4.0
103-17 : -0-15
FNMA 4.5
105-25 : -0-08
GNMA 3.0
97-11 : -0-23
GNMA 3.5
101-10 : -0-20
GNMA 4.0
104-02 : -0-14
GNMA 4.5
105-31 : -0-07
FHLMC 3.0
96-01 : -0-23
FHLMC 3.5
100-02 : -0-19
FHLMC 4.0
103-10 : -0-16
FHLMC 4.5
105-10 : -0-08
Pricing as of 11:05 AM EST
Morning Reprice Alerts and Updates
Below is a recap of instant Reprice Alerts and updates issued via email and text alert to MBS Live subscribers this morning.

10:10AM  :  ECON: ISM Manufacturing Much Stronger Than Expected
- PMI at 55.4 vs 52.0 forecast, 50.9 in June
- New Orders 58.3 vs 51.9 in June
- Employment Index 54.4 vs 48.7 in June
- Prices Paid 49.0 vs 54.2 forecast, 52.5 in June
- PMI and New Orders Highest since mid 2011
- Employment Highest since June 2012

Market Reaction: This was outside the boundaries of an average "beat" or "miss." The movement was quick in response. Yesterday's post-FOMC gains are now erased.

Manufacturing expanded in July as the PMI™ registered 55.4 percent, an increase of 4.5 percentage points when compared to June's reading of 50.9 percent. July's reading of 55.4 percent reflects the sixth month of growth, and the highest overall PMI™ reading, in the first seven months of 2013. A reading above 50 percent indicates that the manufacturing economy is generally expanding; below 50 percent indicates that it is generally contracting.

A PMI™ in excess of 42.2 percent, over a period of time, generally indicates an expansion of the overall economy. Therefore, the July PMI™ indicates growth for the 50th consecutive month in the overall economy, and indicates expansion in the manufacturing sector for the second consecutive month. Holcomb stated, "The past relationship between the PMI™ and the overall economy indicates that the average PMI™ for January through July (52.1 percent) corresponds to a 3.1 percent increase in real gross domestic product (GDP) on an annualized basis. In addition, if the PMI™ for July (55.4 percent) is annualized, it corresponds to a 4.1 percent increase in real GDP annually."
10:02AM  :  ALERT ISSUED: Bond Markets Selling Off After ISM Data
10's up to 2.68, Fannie 3.5s down 18 ticks to 100-12, Fannie 4.0s down 13 ticks to 103-19. More to follow...
9:01AM  :  Quiet Overnight; Weaker After Claims Data
10yr yields held an exceptionally narrow 2.586-2.61 range overnight with fairly light volume. Stronger than expected Jobless Claims prompted weakness in bond markets and that's about all that's going on this morning so far! ECB's Draghi is in the middle of his press conference Q&A after the ECB held rates steady as-expected, but Treasuries and domestic markets are doing more to lead European markets and Bunds (the most similar European government debt issuance to US Treasuries).

10's are now up to 2.6353. MBS opened flat and are now down 13 ticks in Fannie 3.5s to 100-17 and 9 ticks in Fannie 4.0s at 103-23.
8:35AM  :  ECON: Jobless Claims Stronger Than Expected
- Claims 326k vs 345k f'cast, 345k previous
- Lowest since Jan 2008
- Continued Claims 2.951 mln vs 2.994 mln f'cast

- Market Reaction: MBS off several more ticks from already slightly weaker morning. 10's right back to testing to 2.62's.

In the week ending July 27, the advance figure for seasonally adjusted initial claims was 326,000, a decrease of 19,000 from the previous week's revised figure of 345,000. The 4-week moving average was 341,250, a decrease of 4,500 from the previous week's revised average of 345,750. The advance seasonally adjusted insured unemployment rate was 2.3 percent for the week ending July 20, unchanged from the prior week's unrevised rate. The advance number for seasonally adjusted insured unemployment during the week ending July 20 was 2,951,000, a decrease of 52,000 from the preceding week's revised level of 3,003,000. The 4-week moving average was 3,026,000, a decrease of 500 from the preceding week's revised average of 3,026,500.
Live Chat Featured Comments
A recap of the featured comments from the MBS Live Dashboard's Live Chat feature, utilized by hundreds of industry professionals each day.

Hugh W. Page  :  "IMO,I think tapering talk starts up again in Sept but no action at that meeting. We need more consistency in this positive data and signs it's perking up GDP and inflation before they act."
Hugh W. Page  :  "Dan, never used them but heard that First Federal of Jacksonville does CP loans (don't know about Jumbo)"
Dan Clifton  :  "anyone have a wholesaler doing constrction loans jumbo? "
Oliver Orlicki  :  "all this fuels the fire for fed talk and tapering in sept"
Oliver Orlicki  :  "hits just keep on coming"
Matthew Graham  :  "RTRS- ISM U.S. MANUFACTURING EMPLOYMENT INDEX 54.4 IN JULY VS 48.7 IN JUNE "
Matthew Graham  :  "RTRS- ISM U.S. MANUFACTURING NEW ORDERS INDEX 58.3 IN JULY VS 51.9 IN JUNE "
Michael Gillani  :  "Wow, looking at that chart puts a lot in perspective. We've exceeded well over 200k on may occasions throughout the past 3-4 years only to fall back down to much lower levels near or below the 135 mark. So why all the we've made it thought now that we're hovering around 200k for the past several months?"
Victor Burek  :  "s&p breaks 1700"
Matthew Graham  :  "correct "
Matthew Graham  :  "here's where the 130k-ish comment comes from: http://screencast.com/t/VsVlaXSVC"
Michael Gillani  :  "And forecast is 184 and 7.5 right?"
Andy Pada  :  "telling you all right now that if NFP beats, I'm buying the biggest forward commitment."
Matthew Graham  :  "130k-ish, with negative revisions for good measure"
Michael Gillani  :  "What type of miss in NFP would garner a move below 2.46 MG in your opinion?"
Matthew Graham  :  "2 more NFPs to go. If they're both near 200k, volatility will decrease and 10's will approach 3% as September tapering is priced in more fully."
Victor Burek  :  "I agree...been saying since ben at that boston speech, no way they taper in sept"
Matthew Graham  :  "there's a vocal minority calling for December > November "
Victor Burek  :  "be interesting if they taper at same time the lower their forecasts"
Matthew Graham  :  "next forecasts are out with the sept 18 meeting"
Victor Burek  :  "speaking of revisions..when does the fed revise their gdp projections?"
Matthew Graham  :  "RTRS- MARKIT U.S. MANUFACTURING SECTOR FINAL PMI FOR JULY AT 53.7 VS FLASH READING 53.2 AND JUNE FINAL 51.9 "
Christopher Stevens  :  "This line from MG scares the hell out of me... "Given that we subsequently ended the day right back inside that range, the eventual breakout could be even more violent, but ESPECIALLY if today's data manages to keep yields contained in the same range.""
Christopher Stevens  :  "hmmmm..back over that top line in the consolidation pattern. Not getting a good feeling regarding tmrws NFP. "
Matthew Graham  :  "RTRS- US CONTINUED CLAIMS FELL TO 2.951 MLN (CONS. 2.994 MLN) JULY 20 WEEK FROM 3.003 MLN PRIOR WEEK (PREV 2.997 MLN) "
Matthew Graham  :  "RTRS - US JOBLESS CLAIMS 4-WK AVG FELL TO 341,250 JULY 27 WEEK FROM 345,750 PRIOR WEEK (PREVIOUS 345,250) "
Matthew Graham  :  "RTRS- US JOBLESS CLAIMS LOWEST SINCE 321,000 IN JAN 19, 2008 WEEK "
Matthew Graham  :  "RTRS- US JOBLESS CLAIMS FELL TO 326,000 JULY 27 WEEK (CONSENSUS 345,000) FROM 345,000 PRIOR WEEK (PREVIOUS 343,000) "
Andy Pada  :  "England and ECB stay the course"
Andy Pada  :  "I locked Tuesday morning but if there is a pop, I will lock more today"
Matt Hodges  :  "i think i'm locking up some loans today - u?"

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