A Quick Look at the Stock-Lever This Morning

The "Stock Lever" is one of those concepts we reference fairly regularly here, but have you ever wondered how relevant it actually is?  Could it be the sort of thing we lean on as a crutch when we can't think of anything better to say? 

First of all, we're not too shy about calling spades spades if we ascribe certain market movements to one thing and it turns out that something else is a better explanation in hindsight.  Secondly, the stock lever is legit!  It's not that it's this amazing and pervasive motivation for all market movements, but when swings have been big and uncertainty has been prevalent, why wouldn't we expect the representatives for "risk" and "safety" to mirror and match each other to a noticeable degree? 

Just a quick chart this morning showing that it was a mini-surge in stocks that contributed to the mini sell-off in Treasuries earlier this morning.  We're using the Dow in this chart (normally prefer S&P, but we get more frequent ticks on the Dow and considering the very narrow time period on the following chart, more ticks of data were important)

Pretty clear right?  Incidentally, you might notice that 10's seem to be trying to hold on to 1.99 as support.  As that continues to be the case, MBS show that they greatly enjoy the stability in benchmarks.  4.0 Fannie 30's are down only 2 ticks at 104-09.  3.5's are down 4 ticks at 101-12, both about mid-range on the morning.