MBS MID-DAY: 11/1/2011

By: Matthew Graham
MBS Live: MBS MID-DAY
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FNMA 3.5
102-08 : +0-14
FNMA 4.0
104-12 : +0-10
FNMA 4.5
106-01 : +0-08
FNMA 5.0
107-25 : +0-06
GNMA 3.5
104-09 : +0-16
GNMA 4.0
107-06 : +0-13
GNMA 4.5
109-01 : +0-10
GNMA 5.0
110-05 : +0-08
FHLMC 3.5
102-01 : +0-14
FHLMC 4.0
104-03 : +0-08
FHLMC 4.5
105-23 : +0-08
FHLMC 5.0
107-11 : +0-03
Pricing as of 11:02 AM EST
Morning Market Updates
A recap of MBS Market Updates provided by MND Analysts and streamed live to the MBS Live Dashboard.
10:19AM  :  Fed Announces Borrowers from Four Mortgage Servicers Can Request Independent Review of Foreclosure
The Federal Reserve Board on Tuesday announced that borrowers who believe they were financially harmed during the mortgage foreclosure process by four institutions in 2009 and 2010 can now request an independent review and potentially receive compensation.

Four large mortgage servicers supervised by the Board--GMAC Mortgage, HSBC Finance Corporation, SunTrust Mortgage, and EMC Mortgage Corporation--are required to conduct this program as part of their compliance with enforcement actions issued by the Board in April 2011. Under these actions, servicers are required to compensate borrowers for financial injury resulting from deficiencies in their foreclosure processes. A number of servicers supervised by the Office of the Comptroller of the Currency must also conduct the program.

Read More Here
10:02AM  :  ECON: Construction Spending Growth Slows on Gov't Drag
(Reuters) - Growth in U.S. construction spending slowed in September as governments cut back on building and maintaining schools and public transportation, a government report showed on Tuesday.

Total construction spending rose 0.2 percent to an annual rate of $787.21 billion, the Commerce Department said. Economists polled by Reuters had forecast a 0.3 percent increase after August construction spending rose by an upwardly revised 1.6 percent.

Spending on public construction fell 0.6 percent last month, with cuts felt across government departments from healthcare and schools to public safety and conservation. Federal spending dropped 6.8 percent, its steepest decline since December of last year. State and local outlays edged up 0.1 percent.

In the private sector, construction spending rose 0.6 percent, with residential spending up 0.9 percent and nonresidential spending up 0.3 percent.

Total construction spending was down 1.3 percent from September of last year, hurt by a 9.2 percent decline in public sector outlays. Private spending was up 3.9 percent on the year. (Reporting by Jason Lange, Editing by Andrea Ricci)
8:42AM  :  ALERT: Greek Referendum Rocks Markets At The Open, Or Does It?
The "big" story this morning is that Greek PM Papandreou has called 2 surprise votes: one over the confidence in his governance set to occur by the end of this week and the bigger one on whether or not to proceed with the proposed bailout structure (about 3 months from now). Yes, you're reading that right... It's the Monday after the Thursday when the most significant solution to the Greek debt crisis was finally hammered out, and now Papandreou is going to put it to a vote (after the vote on how much folks like him).

This then, is the news that is sending shockwaves throughout markets this morning? Bringing the 10yr yield back to 2% and Fannie 3.5's over 102? Sort of...

Rather, this news is the spokesperson for a much broader collection of data, ideas, and fears supporting the "risk-off" trade that lay dormant while the "risk-on" camp had their day in the sun (brief day). Looking at overnight markets, stocks were well on their way to current levels before any news out of Greece. MF Global just filed the 8th largest bankruptcy in history. Italy increasingly looks like a 2nd, and more severe "Greece." And the list goes on...

Bottom line, the referendum is the big news of the day, but look at it more like one brave soldier in an army that turned the tide of battle. There are plenty of other players.
With that bit sorted out, here's a quick check of current levels

Fannie 3.5's up 11 ticks at 102-05
Ginnie 3.5's up 10 ticks at 104-03
10yr yields down 10bps at 2.014
5yr yields down 5 bps at 0.915

Expect MBS to lag TSY's into the risk-off trade but rate sheet improvements to have room to keep pace with those tepid MBS gains. What's a quarter point among friends when Greek panic resurfaces?! Parting thought: this is like a new version of Groundhog's day and Greece not only saw its shadow but got freaked right the heck out by it. 3 more months of uncertainty.
Featured Market Discussion
A recap of the featured comments from the Live Discussion on the MBS Live Dashboard.
Ken Crute  :  "my best ex on 30yr improved by .25% in rate "
Brent Borcherding  :  "How much better, KC?"
Ken Crute  :  "secondary likes the green, showing some major love on the rate sheets today "
Brent Borcherding  :  "S&P going to get ugly over the next month...unhappy holidays ahead for many."
Matthew Graham  :  "some longer term charts as well: http://www.mortgagenewsdaily.com/mortgage_rates/blog/234593.aspx"
Matthew Graham  :  "wow JS. I literally just published the same question with different words: " The only question now is whether or not markets will truly be relegated to the same sort of volatility and EU Headline-Watching seen over the past 3 months.""
Jamall Singh  :  "How long will it continue? Big question..."
Victor Burek  :  "flagstar is .6 better than their reprice from yesterday"
Matthew Graham  :  "RTRS - US SEPT CONSTRUCTION SPENDING +0.2 PCT (CONSENSUS +0.3 PCT) TO $787.2 BLN VS AUG +1.6 PCT (PREV +1.4 PCT) "
Matthew Graham  :  "RTRS - ISM REPORT ON U.S. MANUFACTURING SHOWS PMI AT 50.8 IN OCTOBER (CONSENSUS 52.0) VS 51.6 IN SEPT "
Andrew Horowitz  :  "2.40 last thursday 2.00 today that is what i call a rejection of the breakout"
John Rodgers  :  "WF and BBT are out"
Mike Drews  :  "anyone have rates yet?"
Chris Kopec  :  "Mr. Sarkozy is set to discuss the situation by telephone with German Chancellor Angela Merkel, a spokesman said earlier. "
Matthew Graham  :  "how are the next 3 months any different from the last 3?"
Matthew Graham  :  "ok, I hear ya guys, but what if greece doesn't vote to agree on the bailout until January?"
Chris Kopec  :  "True MG....the story has changed twice in the past 2 weeks.....Euro worry, to domestic strength, to Euro optimism, to no more recession, back to Greek worry."
Victor Burek  :  "i agree..all about europe again"
Matthew Graham  :  "domestic econ data back in the passenger seat until/unless EU issues on firmer footing"
Matt Hodges  :  "MG - sustained low rates, but maybe low 4's. I think the short term aspect is the high 3's"
John Rodgers  :  "Originate like hell the next two days."
Adam Dahill  :  "locking on way down"
John Rodgers  :  "I still think this rally will be short in duration. "
Matthew Graham  :  "dahill: http://www.reuters.com/article/2011/11/01/greece-referendum-idUSL5E7M108720111101"
Adam Dahill  :  "where is there more details on last night's fiasco"
Matthew Graham  :  "that's my final answer regis"
Matt Hodges  :  "the deal"
Adam Dahill  :  "10yr sub 2.0% wowsers"
Matthew Graham  :  "and what did papandreou just undo last night?"
Matt Hodges  :  "EU solved"
Matthew Graham  :  "what caused the run-up to thursday?"
Matt Hodges  :  "too quick run down from Thursday - "
Adam Dahill  :  "you guys think we are here to stay or is this another headfake like last week"
Gaius Rossini  :  "The website hosting FHA’s Online Guide (Handbooks 4155.1, 4155.2, and 7610.1) is temporarily unavailable. We apologize for any inconvenience you may have experienced. FHA and the General Services Administration (GSA) are working to restore service as soon as possible. In the interim, the full handbooks in PDF version can be accessed on HUD’s website here: 4155.1 - http://portal.hud.gov/hudportal/HUD?src=/program_offices/administration/hudclips/handbooks/hsgh/4155.1 4155.2 - http://p"
Jason Zimmer  :  "i use to have a link for looking up guidelines on FHA but now the link doesn;t go anywhere. does anyone know where that site went? It was... http://www.fhaoutreach.gov/FHAHandbook/prod/index.asp but now that's gone."