MBS Live: MBS Afternoon Market Summary
Today was probably the most unequivocally tame and slightly positive day for bond markets of the past several weeks. Amid the chaos of the recently severe sell-off, it's tempting to view such days as turning points. Indeed, this COULD turn out to be the case, but today's price action would be mere coincidence if that's what happens. Today was an unofficial day-off for markets and that seems clear based on the movement, volume, and that which preceded it. Today was obviously "phoned-in" in favor of trying again next week. So yes... It could be a turning point, but not because of anything that happened today. This longer term 10yr treasury chart shows some evidence of the "hope" that a double bounce along the upper teal line is the sign of the turning point, but we're not too excited about it until the lower teal line is broken. More to the point, we're still in the big, red, railroad tracks of doom that have dominated August.

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
104-24 : +0-07
FNMA 4.0
106-10 : +0-04
FNMA 4.5
107-19 : +0-04
FNMA 5.0
108-20 : +0-02
GNMA 3.5
106-24 : +0-02
GNMA 4.0
108-21 : +0-02
GNMA 4.5
109-02 : +0-02
GNMA 5.0
110-06 : +0-01
104-18 : +0-07
106-01 : +0-03
106-29 : +0-03
107-28 : +0-01
Pricing as of 4:06 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  :  ALERT ISSUED: MBS Outpeform Into The PM, Moving Sideways Vs Weaker Treasuries
Just a quick note and update to the selling that emerged around 1pm. MBS have been able to do a good job of fighting back against that relative weakness so far. Whereas Treasuries have pretty much held those losses, MBS have clawed back a tick or two and are trading just over opening levels. We've seen a few positive reprices here as MBS hold their ground. 102-03 short term support in Fannie 3.0's.
1:17PM  :  ALERT ISSUED: Black Box Selling Ramps Up. MBS, TSYs Unable To Break Resistance
It's 1pm on a Friday that many market participants would just assume not trade. With clear short term technical boundaries at 1.87 and 1.78, 10yrr yields have traded determinedly sideways in the broader trend of the past two session--essentially setting up camp for the weekend and ready to get back to trading on Monday.

Most recently today, we're seeing a big rejection of a break into the 1.7's and a ton of sell-side program trading in Treasury futures beginning at 12:56. This translated to Fannie 3.0 MBS getting capped out at 102-08 on the day and now back down to 102-04.

Current losses aren't enough to be concerned about negative reprices--at least not reprices that are motivated by trading levels (leaving the door open for serendipitous pipeline control reprices), but we would note the increased bias toward selling among black-boxes (algo trading). Some support has stepped in in the mid 1.81 area in 10yr yields, but not nearly to the extent that sellers stepped in to reject the break below 1.80 earlier.

Setting up for an ominous afternoon if this continues to be the case. We're not sure yet if that will be ominous enough to get MBS into more likely negative reprice levels, but we wouldn't tune out for the weekend just yet.
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.

Jim Begley  :  "Never mind, they have posted it now. This one is only 369 pages. http://files.consumerfinance.gov/f/201208_cfpb_tila_mlo_compensation_proposed_rule.pdf"
Bill Laffey  :  "REPRICE: 3:33 PM - Cole Taylor Better"
Jim Begley  :  "Anyone have link to the CFPB proposed rule on LO comp released today? I've looked on the CFPB website but can't find it."
Steven Stone  :  "300mm of loans...thats about 1500 loans..."
Steven Stone  :  "look at it this way - 5mm net worth, you can sell 100mm to fannie, 100mm to freddie and why not 100mm of ginnie"
Steven Stone  :  "i guess peeps are just going to have to keep building net worth...not a new trend"
S John Murray  :  "all new seller servicers or those that are re activating their seller servicer agreement"
S John Murray  :  "so the example they used for us is a net worth of $10M allows for us to deliver $200M a year but they did say that HARP and DU refi plusare not counted in that number and that the 20X was more of a "rule of thumb" for what that is worth"
Andy Pada  :  "SJM, so this is for all new seller/servicers approved or those pending approval."
S John Murray  :  "Annually "
Andy Pada  :  "20 x net worth monthly or annually?"
S John Murray  :  "oops I meant 20 X net worth cap not earnings"
Brent Borcherding  :  "Heard US Bank is going to have one comp level for all wholesale soon, too."
S John Murray  :  "AG I just returned from a Lender's One conference in Chicago and FNMA told us in a break out session with them that all new seller servicers were going to be subject to that 20 x earning cap...and then went into great detail as to how the calculate net worth."
Adam Quinones  :  "http://www.mortgagenewsdaily.com/channels/pipelinepress/05082012-harp-3-0-mortgage-insurance.aspx"
Adam Quinones  :  " One piece of scuttlebutt from this conference in NY is the possible capping of agency counterparty risk in the form of limiting sales to Freddie & Fannie based on net worth. At this point it is a rumor, but if it plays out, it could severely hamper small independent mortgage bankers in selling large sums to Fannie & Freddie and help the depositories. "
Andy Pada  :  "net worth? % sold to Fannie/Freddie will be % of net worth?"
MC  :  "REPRICE: 11:32 AM - Flagstar Better"
Andy Pada  :  "how will they limit counterparty risk?"
Adam Quinones  :  "they are going to boost gfees and limit counterparty risk "
Andrew Russell  :  "what are they going to AQ?"
Adam Quinones  :  "my comment was HERE COME HIGHER G-FEES"
Andy Pada  :  "AQ, Did you read the Treasury Announcement re: Fannie/Freddie? Any thoughts?"

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