MBS MID-DAY: Ongoing Weakness Ahead of Fed

Bond markets began the day reasonably close to unchanged levels, but were soon moving into weaker territory.  Part of the move can be attributed to European markets.  If the remainder needs any justification, it easily has it in the lack of disconcerting Ukraine-related headlines and position-squaring ahead of this afternoon's FOMC Announcement.

Even then, the weakness has been moderate enough that it doesn't even need justification.  Even now at the lows of the day, Fannie 4.0s are down only 3 ticks at 104-10.  10yr yields are faring a bit worse, up 1.84bps at 2.697.  There are no significant events on the calendar between now and the 2pm Fed Announcement.  Yellen will hold a press conference at 2:30pm, and that could be as much or more of a market mover than the announcement itself.