MBS RECAP: Medium-Sized Dent in Yesterday's Weakness After FOMC Minutes

By: Matthew Graham •

It was a nice, simple day as far as market watching was concerned.  The overnight session was straightforward, with initial weakness driven by Eurozone headlines and data followed by some opportunistic buying after 10yr yields made it all the way up to 2.164.  Bond markets hadn't seen "real money" buyers for what seems like an eternity (yesterday was driven by "fast money," leveraged snowball selling), so those traders betting against bonds were spooked by the show of support and quickly moved to book the profits.  When folks who sold bonds short book profits, they do so by becoming buyers.  Pretty simple. 

The buying quickly carried 10yr yields back to 2.112.  That level held up as a technical barrier until the FOMC Minutes.  The market reaction to that was covered in pretty solid detail HERE.  Long story short though, markets were bracing for a less accommodative tone from the Fed.  When they got the opposite, bonds breathed a sigh of relief.  It wasn't much--only getting 10's back to 2.05 and not doing much at all for rates--but it's in the right direction.  Now it's up to Europe to see if a broader bounce can take shape.

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
101-14 : +0-15
FNMA 3.5
104-16 : +0-13
FNMA 4.0
106-23 : +0-08
Treasuries
2 YR
0.6050 : -0.0610
10 YR
2.0850 : -0.0600
30 YR
2.7160 : -0.0170
Pricing as of 2/18/15 6:17PMEST
Today's Reprice Alerts and Updates
A recap of Alerts and Updates provided to MBS Live subscribers.
2:03PM  :  First Move is Positive Following FOMC
MBS Live Chat Highlights
A recap of featured comments from the Live Discussion on the MBS Live Dashboard.
Matthew Graham  :  "
MBS Live Update Issued
First Move is Positive Following FOMC"
Oliver Orlicki  :  "very dovish"
Matthew Graham  :  "RTRS - FED MEMBERS VIEWED DROP IN INFLATION WITH CONCERN, CITED NEED TO KEEP A CLOSE WATCH ON MEASURES OF INFLATION EXPECTATIONS, BUT STILL REGARD WEAK PRICES AS LIKELY TRANSITORY - FED MINUTES"
Matthew Graham  :  "RTRS - FED POLICYMAKERS CITED HEIGHTENED OVERSEAS RISK AS POTENTIAL THREAT TO U.S. RECOVERY, BUT SAID ACTION BY FOREIGN CENTRAL BANKS HAD IMPROVED THE OUTLOOK - FED MINUTES"
Matthew Graham  :  "RTRS- FED POLICYMAKERS SEE SOLID GROWTH, CONTINUED TIGHTENING OF LABOR MARKETS, GRADUAL RISE OF INFLATION - FED MINUTES"
Matthew Graham  :  "RTRS - MANY FED POLICYMAKERS CONCERNED THAT DROPPING THE WORD "PATIENT" FROM INTEREST RATE GUIDANCE NOW RISKS TYING MARKET EXPECTATIONS TO A NARROW RANGE OF DATES FOR RATE LIFT-OFF - FED MINUTES"
Matthew Graham  :  "RTRS - FED POLICYMAKERS WANT MORE EVIDENCE OF CONTINUED GROWTH, SIGNS THAT INFLATION WILL RISE TO TARGET BEFORE COMMENCING RATE HIKES - FED MINUTES"
Matthew Graham  :  "RTRS - MANY FED POLICYMAKERS LEANING TOWARD KEEPING INTEREST RATES LOWER FOR LONGER, GIVEN WEAK INFLATION AND OTHER RISKS - MINUTES FROM JANUARY FEDERAL OPEN MARKET COMMITTEE MEETING"