MBS Live: MBS Afternoon Market Summary
Today was really Treasuries' time to shine.  Even in the overnight session, 10's were doing much better than German Bunds out of the gate.  Traders and analysts cited protocol changes in certain European pension funds forcing money out of lower-risk EU sovereigns as well as German and EFSF auctions.  But beyond that, US Treasuries were simply star performers, battling back from yesterday's weakness even before the auction, and continuing lower in yield into the afternoon.  MBS and lender rate sheets weren't too keen to follow although they did so reluctantly, giving up ground to Treasuries in bits and pieces throughout the day.  
MBS Pricing Snapshot
Pricing shown below is delayed, please note the timestamp at the bottom. Real time pricing is available via MBS Live.
FNMA 3.5
104-27 : +0-06
FNMA 4.0
106-08 : +0-03
FNMA 4.5
107-07 : +0-01
FNMA 5.0
108-09 : +0-01
GNMA 3.5
106-28 : +0-04
GNMA 4.0
109-07 : +0-03
GNMA 4.5
109-24 : -0-03
GNMA 5.0
110-15 : -0-05
104-20 : +0-06
105-30 : +0-04
106-24 : +0-03
107-17 : -0-01
Pricing as of 4:04 PM EST
Afternoon 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 afternoon.

3:35PM  :  MBS Reluctantly Improved As Stocks Sell-Off
At last check, MBS were good and doing better. This time around, MBS are still good and doing better. If MBS wanted to be doing any better than "good," they'd have to disguise themselves as Treasuries where the yield curve has flattened out and rallied with 10's and 30's both more than 7bps lower vs yesterday. The best MBS have been able o manage barely approaches 7 ticks in PRICE, let alone 7bps in yield. A fairly healthy stock-market sell-off is helping bond markets edge into stronger territory despite relatively lower volume vs AM hours.

Even though Fannie 3.5's are only 6 ticks up on the day currently, the trading range is improving as stocks sell-off, meaning potential positive reprices continue to be a possibility.
1:22PM  :  ALERT ISSUED: Strong 10yr Auction Improves MBS Outlook Into The Afternoon
Recap of Treasury Auction Jargon if you need it: HERE

Although the bid-to-cover ratio of 3.06 might look average on the surface (indeed it is relatively average, perhaps a little less-than average for 2012, even), there are two important factors to consider being the most obvious: that the high-yield stopped through 1.4bps lower than the 1pm when-issued yield.

First is that yields are simply lower than markets are used to in general. Today's auction was some 20bps lower than May's record low auction. It's a big leap, psychologically and literally. That can create some hesitation, or rather, situations like these have created hesitation in the past.

The second point is in the same vein, and that is that today's movements so far were already leaning toward the strong side. Granted, we do suspect that we witnessed a bit of a "stealth concession" built into y'day afternoon's weakness, but nevertheless, that back-up in yields was fairly minor and this morning's move has been progressively stronger since the open.

Taken in concert, these factors, along with the better-than-expected stopping yield paint a picture of a US Treasury security that has little to fear when it comes to being "overbought" or "too low in rate" in the current environment. And while these things could easily change in the next 7 days, markets are sending a clear message that they are where they want to be heading into the Greek elections this weekend and FOMC next week.

MBS love that "stable benchmark" stuff in general, but MBS traders are smart enough to realize the risks to that stability inherent in the coming days. So while MBS are comfortable following the improvement in Treasuries to some degree, there's no "huge sigh of relief" with the sense of "Oh, it's ok to buy more MBS now that 10's look more stable." Key takeaway here is that 10's only look more stable for now.

Fannie 3.5s are up 3 ticks since the auction and 10yr yields are down just over 2bps. It's a positive result and one that could result in only the earliest and most aggressive few lenders repricing positively. Otherwise, it's just "nice" for now. Looking for 3.5's to break north of 104-26 to increase positive reprice chances or south of 104-21 for negative reprice risk to be increasing. That range is a bit more of a moving target in terms of 3.0s, but probably best viewed at 102-02 being downside risk with 102-07 (i.e. breaking and holding outside these levels) being the upper resistance "line in the sand."
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.

Michael Tadros  :  "REPRICE: 3:33 PM - Suntrust Better"
Michael Tadros  :  "REPRICE: 2:40 PM - Interbank Better"
Thomas Nelson  :  " Effective immediately, Interbank will not accept new registrations for FHA streamlined loans, regardless of credit score. I have posted this information to our Portal, and the next rate sheet will also carry this announcement. We will honor existing registrations/locks, provided the loan meets our underwriting standards "
Jason Zimmer  :  "interbank...no more streamlines"
Jeff Anderson  :  "REPRICE: 1:52 PM - Chase Better"
Matthew Graham  :  "for a few reasons, but very strong"
Matthew Graham  :  "Santelli might go B-ish on this one, but it's an A"
Victor Burek  :  "still solid?"
Matthew Graham  :  "RTRS- U.S. 9-YR 11-MO NOTES BID-TO-COVER RATIO 3.06, NON-COMP BIDS $10.81 MLN "
Matthew Graham  :  "RTRS - U.S. SELLS $21 BLN 9-YR 11-MO NOTES AT HIGH YIELD 1.622 PCT, AWARDS 33.76 PCT OF BIDS AT HIGH "
Matthew Graham  :  "looking for something around 3.0 as recent average BTC, and when-issued just marked at 1.636. "
Adam Quinones  :  "Fed ate up supply in buyback, leaving the street in need of supply."
Adam Quinones  :  "s/be good auction Patrick"
Chris Kopec  :  "Mike....again, just me talking, but if you are in the money right now, lock and move on. If you have enough of a profit cushion, flood your torpedo tubes and wait for the auction results."
Andy Pada  :  "BB and J-Dub are calling for a good auction, I think I will hold off on locking."
Matt Hodges  :  "i'd have locked two weeks ago, mike"
Chris Kopec  :  "I'd lock today, but I'm a glass half empty dude."
Mike Ford  :  "if closing a purchase end of this month, would you lock today or wait a bit? "
Michael Tadros  :  "REPRICE: 12:39 PM - Provident Funding Better"
Jason Wilborn  :  "not much - I do think the Auction will be a good one though"
Brent Borcherding  :  "Gonna be great, AP."
Andy Pada  :  "What are you guys forecasting for the auction?"
Patrick McCarroll  :  "But it's helping the consumer Curt. Ha!"
Curt Sandfort  :  "Just looked at an appraisal invoice...total...$650, appraiser portion...$300...LSI's portion.....$350. So the AMC is now charging more than the appraiser"

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