Pressure on MBS Prices Following Fed Buyback

Alert and video of the live price action from MBS Live (learn more...):

10yr yields dashed to their highs in the steepest and highest volume movement of the session following the Fed's scheduled buyback in the 8-10 year sector. Dealers had $15.9 bln on offer, and the Fed took down $4.65 bln of that, apparently not enough for the street... Prices cheapened, yields rose, MBS followed with timid capitulation. Nothing of major significance is happening here! Just a minor course correction that might look bigger than it is due to the narrowness of recent trading ranges. Even so, we wouldn't put it past a lender or two with a predisposition for an itchy trigger finger to reprice for the worse. At current price levels, this wouldn't make much sense to us, but some lenders have repriced for the worse in similar past situations. Still... this wouldn't be a widespread phenomenon unless prices fell much further.

Zooming out to a longer term view, however, we see that current losses amount to a relatively small drop in a relatively narrow stream.  Not much to panic about at current prices:

It's a similar story for broader stock and bond markets.  In this overlay of S&P futures and 10yr yields note how each one has basically been doing it's own thing for several months now...  There's a profound sense of "waiting for something to break this monotony."