Domestic bond markets began the day in stronger territory, and you can tell they're not too happy about it. If Treasuries and MBS had their way, they'd still be holding in the same pre-FOMC range marked by a low of 2.04% in 10yr yields. Considering 10's only made it down to 2.014, they haven't exactly been unsettled.
It's not for lack of trying though! Europe had a wild night that continued into the domestic session. Germany had a 10yr auction that can only be described as epic. It had a record low yield and nearly a record high level of demand (highest in 13 years). Other events included central bank headlines in England and Sweden, ECB bond buying, and some modest Greek Drama. All of them conspired to fuel a strong rally in core European bond markets--something that would normally result in a bigger move in US bond markets.
But Treasuries and MBS already had good seats for the upcoming show and weren't interested in moving too far. European yields have continued to push lower into the end of their trading day, yet MBS and Treasuries have been grinding sideways and slightly weaker from the morning's best levels. So far, things have stayed as calm as we could hope for. That's all but guaranteed to change in a big way at 2pm, and again from 2:30pm on.
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 3.0 101-16 : +0-03 | FNMA 3.5 104-14 : +0-03 | FNMA 4.0 106-18 : +0-02 |
| Treasuries | 2 YR 0.6740 : +0.0000 | 10 YR 2.0240 : -0.0284 | 30 YR 2.5770 : -0.0300 |
| Pricing as of 3/18/15 12:28PMEST |
Morning Reprice Alerts and Updates
9:53AM : Mind-Bendingly Strong European Rally Drags US Yields Reluctantly Lower
Live Chat Featured Comments
Hugh W. Page : "Removal of the "patient" word is simply the next step in trying to unwind the last 6 yrs of ZIRP which I'm sure the Fed would love to accomplish. I think it (word chg) will happen and now we'll be in a world where each Fed meeting might be "the one" where they pull the trigger on FF. But, couldn't it still take a many months before that piece happens if the economy doesn't markedly improve from this point forward ? "
Matthew Graham : "and scratch their heads as to why markets aren't moving in the direction suggested by the word. Actually, the smartest and most annoying thing media does is to observe the market reaction and pick the changes in the announcement that most support the reaction."
Andy Pada, Jr. : "that being said, if a new word replaces "patient" then the media will dwell on that."
Matthew Graham : "I don't think any of that changes anything. I think media looks for something to label as important, even when there is nothing there."
Dan Clifton : "so if "patient" is removed the move of MBS really depends on what it is replaced by, more vanilla word like "flexible" really doesn't change anything for MBS"
Matthew Graham : "DJ-SWEDEN RIKSBANK CUTS REPO RATE TO -0.25% AND BUYS GOVERNMENT BONDS FOR SEK30B"
Matthew Graham : "one example RTRS- GERMAN ECON MIN GABRIEL SAYS DOES NOT EXPECT A SOLUTION TO GREECE'S PROBLEMS TO BE REACHED AT THE EU SUMMIT THIS WEEK"
Victor Burek : "bunds rallying big this morning"
John Tassios : "I agree with your 8:36 comment MG, that is why if the FED increases rates, even by a 1/4 and then says they will wait, markets will not buy it. If FED begins increases, it ill happen every meeting thereafter. "
Matthew Graham : "I don't know if it matters. I re-read all the statements before and after major verbiage changes last night and am convinced that markets, media, talking heads, etc. all suck at identifying what's important in Fed statements, and what the trading reaction would be like based on certain verbiage variables. "Patient" deserves no focus. Furthermore, they had an ostensibly dovish verbiage change the month before tapering began. I remember people talking about that in a hopeful way. Bad idea. "
John Tassios : "or best case, leave it in due to slower econ data lately and falling inflation"
John Tassios : "they could do a more hawkish stance and just remove it and not really replace. that would be worse case for us"
John Tassios : "Coffee Hour Survey time - FED Stmt today 1: "Patience" remains 2: "Patience" Removed 3: "Patience Replaced by different word or phrase, such as "Flexible""