"Jobless Claims remained in the 280's and GDP came in at 3.5 vs a 3.0 forecast.  So naturally, bond markets are adding to yesterday's weakness."

That sentence would be seem logical and appropriate for most any time in the history of bond markets, but as we continue to navigate the extended post-crisis tumult, a strange new reality is constantly being defined.  2013 was the last time we saw a really firm connection between data and trading levels.  The interesting thing was that it was the opposite of the traditional connection.  Weaker data actually helped bond markets as it prolonged the hope that QE3 would stick around. 

After tapering began--and even more so after it became apparent that it was on an all but predetermined, linear course--bond markets became increasingly divorced from data and increasingly dependent on tradeflows and on related markets for guidance.  As we discuss incessantly, one of the most instructive related markets has been Europe, with German Bunds (the European equivalent of our 10yr Treasuries) acting as a drag on domestic rates that might otherwise be trying to claw their way higher.

And so it is this morning that we find ourselves in positive territory for both Treasuries and MBS, despite the stronger data.  Yesterday's FOMC and now this morning's data have been largely unimportant as near-term trading considerations.  But a big rally in German Bunds?  Now that's something!  (Note: there are other factors in play at the moment, including supportive month-end bond market tradeflows, but the European influence is the x-factor).

2014-10-30 bunds

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
100-04 : +0-03
FNMA 3.5
103-14 : +0-04
FNMA 4.0
106-05 : +0-03
2 YR
0.4770 : -0.0120
10 YR
2.2980 : -0.0230
30 YR
3.0270 : -0.0260
Pricing as of 10/30/14 12:00PMEST

Morning Reprice Alerts and Updates
A recap of Alerts and Updates provided to MBS Live subscribers.
9:28AM  :  Bond Markets Dig in With Help From Europe

Live Chat Featured Comments
A recap of featured comments from the Live Discussion on the MBS Live Dashboard.
Andy Pada, Jr.  :  "me too"
Christopher Stevens  :  "agree 100% on that"
Sung Kim  :  "hope MSAs go away"
Steven Fishman  :  "What are peoples thoughts about MSA's and the future of them?"
Christopher Stevens  :  "the $ figure is less important than the fact costs are being driven higher by regulations"
Sung Kim  :  "we dont know if that is truly because of regs or because of lenders being slow reduce their overhead in the hopes of another refi rush"
Christopher Stevens  :  "Nothing new in this article but drives home the point that the cost to produce a loan will keep increasing as regulations continue to impede lending. “Regulators who oversee the mortgage market aren’t coordinating, and it’s driving up the cost of homeownership. Or worse, taking homeownership out of reach for too many Americans.” Lenders’ expenses to make a single loan averaged a total of $6,932 in the second quarter, a 35 percent jump from two years ago, http://mndne.ws/1wNPpup"
Matthew Graham  :  "NFP has been so well-behaved. It's a win-win for us because a strong reading is expected and weakness would be a surprise. "
Gus Floropoulos  :  "unless NFP is a big beat"
Gus Floropoulos  :  "ECB imo"
Christopher Stevens  :  "what will pressure the bond market more next week ECB announcement or NFP"
Matthew Graham  :  "like the Fed boldly said yesterday, sure, inflation metrics may indicate lower prices, but expectations are stable, so tough luck"
Matthew Graham  :  "RTRS- US Q3 PCE PRICE INDEX +1.2 PCT (CONS +1.3 PCT), Q2 +2.3 PCT; CORE PCE +1.4 PCT (CONS +1.4 PCT), Q2 +2.0 PCT"
Victor Burek  :  "inflation still well below fed target"
Matthew Graham  :  "RTRS- US Q3 CONSUMER SPENDING +1.8 PCT, VS Q2 +2.5 PCT; DURABLES +7.2 PCT (Q2 +14.1 PCT)"
Matthew Graham  :  "RTRS- US ADVANCE Q3 GDP +3.5 PCT (CONSENSUS +3.0 PCT) VS Q2 +4.6 PCT; FINAL SALES +4.2 PCT (CONS +3.5 PCT), Q2 +3.2 PCT"