MBS and Treasuries both spent time trading on either side of unchanged today.  The swings between the days highs and lows were bigger than normal, and the tenor of the day was never lopsided in favor of bulls or bears.  Case in point, 10yr yields are heading out not even 1bp lower than yesterday's latest levels and Fannie 3.0s are up only 3 ticks. 

The overnight session began with Japan returning to markets after a 3 day weekend.  Asian accounts were better buyers of Treasuries which started things off on a positive note as far as MBS implications are concerned.  The European session brought even more positivity as German Bunds and US Treasuries rallied together.  10yr yields hit a new 19 month low at 1.864.

By the time domestic traders began firing on all cylinders, it was clear they wouldn't be chasing the overnight rally.  As we discussed this morning, breaks of recent long-term lows can serve as cues for traders to book profits.  The selling began in earnest after the official bond pit open at 8:20am.  After walking in the door in positive territory MBS were quickly carried well into the red by the early weakness.

The selling found it's limit right in line with yesterday's mid-day pivot point in 10yr yields (1.944).  This stair-stepping movement has been an ongoing theme for bond markets in the latest leg of the rally, and is commonly seen when technicals and tradeflows are in control.  Once the support was in, MBS were soothed by the lack of further volatility and began outperforming Treasuries.  The latter also likely had an eye on the upcoming 10yr auction.

The auction itself was quite poor, but bonds paradoxically improved with help from a stock sell-off that was too big to ignore. 

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
102-16 : +0-04
FNMA 3.5
105-02 : +0-02
FNMA 4.0
106-24 : -0-03
2 YR
0.5410 : -0.0080
10 YR
1.9000 : -0.0090
30 YR
2.4970 : +0.0020
Pricing as of 1/13/15 5:02PMEST

Today's Reprice Alerts and Updates
A recap of Alerts and Updates provided to MBS Live subscribers.
1:47PM  :  Bond Markets Surprisingly Resilient After Lousy 10yr Auction
9:26AM  :  ALERT ISSUED: Bond Markets on the Run after Treasuries hit 19-Month Lows Overnight

MBS Live Chat Highlights
A recap of featured comments from the Live Discussion on the MBS Live Dashboard.
Timothy Baron  :  "I didnt see an APR for those rates, btw."
Bryce Schetselaar  :  "Another interesting point is that the CFPB in their "shopping around" flyer say shopping can save you money and then show a .5% spread in RATE. Let's be honest, the spread is not nearly that big between well priced and not so well priced lenders"
Bryce Schetselaar  :  "I think in the CFPBs mind, mortgages are like a TV. You can buy the same TV from Costco, WalMart, Amazon, etc...all at different prices. What makes mortgages different is that the lowest priced option may not be the guy that can get it done, or will put you through the ringer to do so"
Matthew Graham  :  "there's a balance when it comes to regulation. We're currently over-regulated and that's normal considering the circumstances."
Timothy Baron  :  "I dont think CFPB has much impact on deals being good or bad. While they do make our jobs more difficult in general, they serve an important enforcement function."
Matthew Graham  :  "The post-crisis environment would have created healthier competition. It's not like riskier loan products were available before the CFPB was even conceived. The crisis was the best self-regulation in history. If shops could more readily lower costs when reasonable (instead of being forced to earn the same on every deal--I know there are some lattitudes for owners/managers, etc, but still), just think of how much less the average consumer would be paying overall. Over the past few years the glaring consensus has been that originators make more money now than pre-CFPB--the ethical ones anyway."
Victor Burek  :  "they increase costs, which are passed to consumers"
Sung Kim  :  "how do we know?"
Matthew Graham  :  "you think CFPB is necessary? I think consumers would be getting better deals without them."
Sung Kim  :  "three shops will ask for different things for the same product and have different rates, CFPB is a necessary evil"
Matthew Graham  :  "I don't know, the whole thing still smacks of "mortgage people" being some twisted maze of necessary evil that has to be navigated."
Matthew Graham  :  "It makes sense to consider multiple houses, but for many clients, it may make perfect sense to use one trusted mortgage originator."
Sung Kim  :  "primary mortgage market is still very very fragmented"
Matthew Graham  :  "a 30yr fixed loan is a commodity that is substantially similar no matter where you get it. There's a rate and fees. There are no differences in the walk-in closet square-footage or nearness to schools as one might consider with a house."
Matthew Graham  :  "The bigger issue is that houses are not loans"
Matthew Graham  :  "For instance, the CFPB is implying that there are bad deals and good deals out there, but in a way, that suggests they're not doing their job effectively. I don't think you can so tightly control costs and compensation in an industry in one breath, and then in another say "you really need to shop around." I know there will always be some variation, but the two notions seem incongruous to some extent."
John Tassios  :  "Also keep in mind, there is a good chance FHA connection site may crash on the 26th , with the rush of new case #'s and cancellations of old ones. so watch your purch close dates and allow for enough time"