MBS MID-DAY: Back to Unchanged After Stronger Start

In terms of domestic economic data and events, not much has happened today.  The key driver of morning gains was the reaction to Bank of England Minutes and comments from BOE Governor Mark Carney.  Long story short, all of the above turned out a bit friendlier than bond markets expected.  Both stocks and bonds then embarked on that familiar "QE-on" trading pattern where stock prices rise while bond yields fall as the persistence of easy money policies is seen to benefit both sides of the market.

Bonds rode that overnight wave into 10am.  This made for some solid morning gains in MBS, lifting Fannie 3.5s up to 102-22.  The 10:15-11:00am Treasury buying operation from the Fed marked the turning point for bonds, though it could have just as much to do with stocks rallying at the same time.  Whatever the case, the move was moderate and Treasuries remain in positive territory while MBS are currently unchanged from yesterday's latest levels.