MBS Live: MBS Morning Market Summary
The morning's data was mostly ignored, save for the short-lived initial bond market rally.  Everything else has merely been a sort of technical, yet highly active "cruise control."  10yr yields, as a benchmark for broader "bond market sentiment," have essentially drifted to the guard-rail on one side of the road leading to more important events in the days ahead.  On this side of the street, that guard-rail is a gradual uptrend in yields beginning around 1.55 on June 6th, and providing underfoot resistance to further gains yesterday afternoon and again this morning.  The mid-point of the current triangle is roughly 1.63, which is where 10's are now.  MBS have been able to hold their ground better by comparison, but such ground-holding could soon break down if 10's cross the midpoint and head decidedly higher.  The 30yr Bond Auction is the next event-based target for market movement.
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
104-25 : -0-03
FNMA 4.0
106-07 : -0-02
FNMA 4.5
107-06 : -0-01
FNMA 5.0
108-09 : -0-01
GNMA 3.5
106-24 : -0-05
GNMA 4.0
109-05 : -0-03
GNMA 4.5
109-19 : -0-06
GNMA 5.0
110-14 : -0-02
104-17 : -0-04
105-28 : -0-03
106-24 : -0-01
107-17 : +0-00
Pricing as of 11:06 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.

10:02AM  :  Freddie Mac: Average Fixed Mortgage Rates Reverse Course
30-year fixed-rate mortgage (FRM) averaged 3.71 percent with an average 0.7 point for the week ending June 14, 2012, up from last week when it averaged 3.67 percent. Last year at this time, the 30- year FRM averaged 4.50 percent.

15-year FRM this week averaged 2.98 percent with an average 0.7 point, up from last week when it averaged 2.94 percent. A year ago at this time, the 15-year FRM averaged 3.67 percent.

5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 2.80 percent this week, with an average 0.6 point, down from last week when it averaged 2.84. A year ago, the 5-year ARM averaged 3.27 percent.

1-year Treasury-indexed ARM averaged 2.78 percent this week with an average 0.5 point, down from last week when it averaged 2.79 percent. At this time last year, the 1-year ARM averaged 2.97 percent.
9:31AM  :  ALERT ISSUED: Bond Market Sparkle And Fade Following Economic Data
The key piece of data this morning was the weekly Jobless Claims report, not only because it's more interesting than the Consumer Price Index and the Current Account reports in general (given the state of inflation and the fact that the other report is looking back at Q1 in a time where the next 6 days are much more meaningful to the global economic future) but also because this is "survey week" for Jobless Claims.

That means that this is the week of the NFP survey's that will be reported in early July. So today's Jobless Claims, while not nearly as important as an NFP report, are generally perceived to be somewhat more important than the other Jobless Claims prints. As such, we'd expect to see a positive reaction in bond markets to a weaker-than-expected report, and it looked like we were getting that at first.

But markets faded the generally lackluster economic data for whatever reason. Candidates include the stock lever, a technical floor in 10's in the mid 1.59's and the knowledge that there's a 30yr bond auction to take down this afternoon. More likely those factors worked in synergy.

Additionally, the "fade" didn't last too long before finding some support. For 10's this was just over 1.62% and Fannie 3.5's at 104-22. 10's are currently back down to 1.6096 and Fannie 3.5 MBS are 3 ticks lower on the day, but improved from the day's lows, currently at 104-25. There are no additional significant economic data/events until the 1pm 30yr Bond Auction.
8:46AM  :  ECON: Current Account Deficit Wider Than Expected
* Q1 deficit 137.3 bln vs 132.3 bln consensus, 117.7 bln prev.
* Largest since 2008
* Deficit equal to 3.6 pct GDP vs 3.1 pct last time

The U.S. current-account deficit—the combined balances on trade in goods and services, income, and net unilateral current transfers—increased to $137.3 billion (preliminary) in the first quarter, from $118.7 billion (revised) in the fourth quarter. Most of the increase in the current-account deficit was accounted for by a decrease in the surplus on income and an increase in the deficit on goods and services.
8:43AM  :  ECON: Consumer Price Index Down 0.3 Pct vs -0.2 Consensus
The Consumer Price Index for All Urban Consumers (CPI-U) decreased 0.3 percent in May on a seasonally adjusted basis, the U.S. Bureau of Labor Statistics reported today. Over the last 12 months, the all items index increased 1.7 percent before seasonal adjustment.

The gasoline index declined 6.8 percent in May, leading to a sharp decrease in the energy index and the decline in the all items index. The indexes for natural gas and fuel oil declined as well, though the electricity index increased. The food index was unchanged, with a slight decline in the index for food at home offsetting an increase in the food away from home index.

The index for all items less food and energy rose 0.2 percent in May, the third consecutive such increase. The indexes contributing to the increase were largely the same ones as in April: shelter, medical care, used cars and trucks, apparel, airline fares, and new vehicles. The indexes for household furnishings and operations and for tobacco declined.

The 12-month change in the index for all items was 1.7 percent in May; this figure has been declining steadily since its 3.9 percent recent peak in September 2011. The decline has been driven mostly by the energy index, which decreased 3.9 percent over the last 12 months. This was its first 12-month decline since October 2009. The 12-month change in the food index, which was 4.7 percent as recently as December, fell to 2.8 percent in May. The 12-month change in the index for all items less food and energy was 2.3 percent in May, the same figure as in April and March.
8:39AM  :  ECON: Jobless Claims Rise To 386k. Last Week Revised Higher
* Claims up 386k vs 375k consensus
* Last week revised to 380k from 377k
* 4-week average rose to 382k
* continuing claims 3.27 mln vs 3.311 mln last time
* This is the "survey week" for non-farm payrolls

In the week ending June 9, the advance figure for seasonally adjusted initial claims was 386,000, an increase of 6,000 from the previous week's revised figure of 380,000. The 4-week moving average was 382,000, an increase of 3,500 from the previous week's revised average of 378,500. The advance seasonally adjusted insured unemployment rate was 2.6 percent for the week ending June 2, unchanged from the prior week's unrevised rate. The advance number for seasonally adjusted insured unemployment during the week ending June 2 was 3,278,000, a decrease of 33,000 from the preceding week's revised level of 3,311,000. The 4-week moving average was 3,281,500, a decrease of 2,500 from the preceding week's revised average of 3,284,000.
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.

John McClellan  :  "fine here on encompass"
john murphy  :  "the encompass stuff is worrisome. considering them for replecement LOS. what about that domain issue of a couple weeks back?"
Ira Selwin  :  "Fine over here with Encompass"
Roger Moore  :  "we can't log on at all. wondering if it is local or an encompass problem"
Roger Moore  :  "anybody having encompass problems?"
Matthew Graham  :  "RTRS - US Q1 CURRENT ACCOUNT DEFICIT $137.3 BLN (CONSENSUS $132.3 BLN BLN), Q4 DEFICIT $118.7 BLN (PREV $124.1 BLN) "
Andy Pada  :  "these numbers are not good"
Matthew Graham  :  "RTRS - U.S. MAY CPI -0.3 PCT (-0.2836; CONSENSUS -0.2 PCT), EXFOOD/ENERGY +0.2 PCT (+0.2018; CONS +0.2 PCT) "
Matthew Graham  :  "RTRS - US CONTINUED CLAIMS FELL TO 3.278 MLN (CON. 3.269 MLN) JUNE 2 WEEK FROM 3.311 MLN PRIOR WEEK (PREV 3.293 MLN) "
Matthew Graham  :  "RTRS - US JOBLESS CLAIMS 4-WK AVG ROSE TO 382,000 JUNE 9 WEEK FROM 378,500 PRIOR WEEK (PREVIOUS 377,750) "
Matthew Graham  :  "RTRS - US JOBLESS CLAIMS ROSE TO 386,000 JUNE 9 WEEK (CONSENSUS 375,000) FROM 380,000 PRIOR WEEK (PREVIOUS 377,000) "
Patrick Waldron  :  "There is a story on Reuters this morning where the writer is comparing the EU to a burning house. The tagline reads "...trying to redesign (the Euro) as flames are leaping from the outhouses to the core of the building..." D'ya thing Greece and Italy are happy being called outhouses?"
Jeff Anderson  :  "GM, all. I'd expect a green day with the Euro implosion apparently picking up steam overnight, but the markets are a quirky bunch."
Victor Burek  :  "the pain in Spain continues..their bond yields hitting record high"

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