Stock Lever Benefits MBS Indirectly

Volatile couple of days for MBS...  After a moderate day of losses yesterday, MBS were down again this morning, and with limited impact expected from economic data, and the sense that we'd be relatively guidance-free until next week's FOMC, we viewed MBS as being indirectly at the mercy of the stock market today.  Why indirectly?  Because Treasuries are the primary beneficiary of stock selling when the "stock lever" is in effect.  Case in point, Treasuries are in the green right now while MBS are still slightly negative on the day.  But MBS are still well off their lows, and fairly in-line with the middle of yesterday's post-sell-off range:

And one more chart, just because we'd had to run the risk of relying on the stock lever to explain movement when if it's not super significant.  We think TSYs and Stocks look fairly connected today though...