MBS RECAP: Ugly Day to End Ugly Week For Bond Markets

By: Matthew Graham •

Actually, the last 2 weeks have been ugly for bond markets.  It's almost as if a switch was flipped as soon as September began.

Just when yesterday looked like it might offer the first significant reprieve, boom... more selling today.  Once again, economic data didn't matter and bond markets showed little regard for technical boundaries.  In terms of 10yr yields, we're now officially testing a break of the long term downtrend of 2014.  This is the chart that showed that break from today's mid-day commentary:

Whether it's the herd mentality or reality, markets are focused on next week's FOMC Announcement as either the justification for this bond market move, or a source of relief.  At this point, there's enough of a herd to be sure that the Fed will have a big impact either way on Wednesday.

MBS Pricing Snapshot
Pricing shown below is delayed, please note the timestamp at the bottom. Real time pricing is available via MBS Live.
MBS
FNMA 3.0
97-20 : -0-13
FNMA 3.5
101-15 : -0-10
FNMA 4.0
104-27 : -0-10
Treasuries
2 YR
0.5640 : +0.0080
10 YR
2.6090 : +0.0770
30 YR
3.3420 : +0.0870
Pricing as of 9/12/14 4:35PMEST
Today's Reprice Alerts and Updates
A recap of Alerts and Updates provided to MBS Live subscribers.
3:21PM  :  ALERT ISSUED: Another Leg Down For Prices; More Negative Reprice Risk
1:49PM  :  ALERT ISSUED: Negative Reprice Risk Becoming a Consideration
9:13AM  :  Bond Markets Weaker Again After Bumpy Overnight Session and Stronger Retail Sales
MBS Live Chat Highlights
A recap of featured comments from the Live Discussion on the MBS Live Dashboard.
Matthew Graham  :  "Personally, I think it's a combination of things. The stuff I've been referring to as "the laundry list" recently. Tradeflow repositioning from August to September, then ECB QE disappointment. Massive flood of corporate bond deals. Fed speculation. Geopolitical risk ebbing (maybe?). Mix in with technical/tradeflow snowball and I'm almost satisfied. "
Sung Kim  :  "so then what gives with the carnage?"
Matthew Graham  :  "Again, I'm not sure the verbiage change is as big of a deal as we're being led to believe. It's a deal, of course, but perhaps not exclusively responsible for salvation or damnation"
Sung Kim  :  "what we really need is Yellen to come out today and say our verbiage isnt changing"
Victor Burek  :  "now add that the FED may change their guideance regarding holding rates low for a extended period"
Victor Burek  :  "and our recent rally was based on geopolitical risk and eu QE...geopolitical issues are fading and EU disappointed on QE"
John Rodgers  :  "the economy is pretty good and geopolitical news fading"
Victor Burek  :  "US data been pretty solid"
Tim McNerney  :  "the economy is THAT good now to warrant this sell off? "