MBS RECAP: Widespread Negative Reprices as Bonds Retreat from NFP Gains

In terms of market movement and new developments, there's nothing to add to the mid-day update.  Bond markets were under mild pressure at the outset, but for every trader interested in buying bonds due to Friday's weak NFP data, there were 2 other traders who'd already capitalized on that move and who were now looking to sell. 

We spent a lot of time discussing the 1.84-1.86 inflection zone lately, and in today's still light volume, it came into play in a big way today.  The moment that 1.86 was broken, selling pressure picked up steam in a big way.  take a look:

Naturally, the weakness translated to MBS in terms of timing, making for widespread negative reprices.  Also fairly natural was the fact that MBS escaped with a lesser version of the sell-off (MBS tend to rally less and sell less than Treasuries during these bigger moves).  Fannie 3.0s are heading out with prices still noticeably inside Friday's trading range while Treasuries are pushing their weakest 2-day levels.  That said, the weakest 2-day levels also look to be providing support.  If they continue to do so tomorrow, we'll have an interesting fight on our hands between that support and the resistance at the 1.84-1.86 inflection zone.