MBS MID-DAY: It's Almost Only the 3rd Worst Day of the Year for Bond Markets!

By: Matthew Graham •

There's a nice rally underway today, with 10yr yields down 6.2bps and Fannie 3.5s up just over 3/8ths of a point.  The underlying motivation is an even stronger move in European bond markets (about twice as strong, actually), but US markets have held their own ahead of today's 30yr bond auction (usually something that prompts preemptive selling as opposed to an ongoing rally).  It's such a good day, in fact, that if we're able to extend these gains just a bit, it would only be the 3rd worst day in 8 months as opposed to the 2nd!  Hurray?

Translation: this strength always COULD be the start of something more positive, but as of this moment in time, it's just the 2nd worst day in 8 months.  "Gotta start somewhere."  That's one way to look at it, but it's too soon to say anything is starting.

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
99-02 : +0-16
FNMA 3.5
102-21 : +0-14
FNMA 4.0
105-20 : +0-09
Treasuries
2 YR
0.7290 : +0.0000
10 YR
2.4220 : -0.0640
30 YR
3.1420 : -0.0740
Pricing as of 6/11/15 12:48PMEST
Morning Reprice Alerts and Updates
A recap of Alerts and Updates provided to MBS Live subscribers.
9:30AM  :  Morning Rally in Spite of Stronger Data, Thanks to Europe
Live Chat Featured Comments
A recap of featured comments from the Live Discussion on the MBS Live Dashboard.
Matthew Graham  :  "Italian/Spanish yields rose one that, as well, which pretty much confirms it as the source of the Bund rally."
Matthew Graham  :  "RTRS- IMF SPOKESMAN SAYS TECHNICAL DISCUSSIONS WITH GREEKS HAVE STOPPED, FUND TEAM HAS RETURNED FROM BRUSSELS"
Matthew Graham  :  "RTRS- IMF SPOKESMAN SAYS 'MAJOR DIFFERENCES' WITH GREEKS ON AID NEGOTIATIONS, 'WELL AWAY' FROM AN AGREEMENT"
John Tassios  :  "MG's morning Day Ahead was spot on. His references to his recent past commentaries of this being a part of something bigger was spot on. His msg was that our mindset has to change with this selloff, not ur traditional selloff based on fundamentals. This includes a hard headed mindset caffeinated greek LO too. For past few years, the US Bond market led the world bond market overall in trading. This was due to the US FED implementing QE's and other measures early on to combat effects of 2008 crisis. But 2015 is different, in 2015 post ending of FED QE, ECB QE took over the central bank bond buying void. The European Bond Market, in particular , the German Bund, now led and STILL leads the the bond market trading worldwide, with US TSY's along for the ride. The pile on trade became so one sided, most yields in EU bonds went negative. Neg yields causes imbalances in balance sheets and bond trading and are very unstable. Any little trigger can cause and as we have seen, HAS caused a massive correction led by the Bund and EU bonds."
Matthew Graham  :  "RTRS - U.S. MAY EXPORT PRICES +0.6 PCT (CONSENSUS +0.2 PCT) VS APRIL -0.7 PCT (PREV -0.7 PCT)"
Matthew Graham  :  "RTRS- U.S. MAY IMPORT PRICES +1.3 PCT (CONSENSUS +0.8 PCT) VS APRIL -0.2 PCT (PREV -0.3 PCT)"
Matthew Graham  :  "RTRS - US MAY RETAIL SALES EX-AUTOS +1.0 PCT (CONS +0.7 PCT) VS APR +0.1 PCT (PREV +0.1 PCT)"
Matthew Graham  :  "RTRS - US MAY RETAIL SALES +1.2 PCT (CONSENSUS +1.1 PCT) VS APR +0.2 PCT (PREV UNCHANGED)"
Matthew Graham  :  "thanks for the kind feedback all. re: halfway through, I don't want to get too caught up in worrying about specific levels, but yes, if it maximized its potential, it would be over 3%. We'd need to see some event to drive that though--like a surprise in the upcoming FOMC Announcement"
David Gaffin  :  "GM All, Great post MG. When you say only half way through, do you mean the move from 1.67 to 2.50 has another 83 bps to go or some other number?"
Christopher Stevens  :  "vey nice MG"
Matt Hodges  :  "tempted to stop reading in the first paragraph, but glad i didn't. you crushed it MG"
Matthew Graham  :  "
A new 'Day Ahead' has been issued:
Fireside Chat on Mid 2015 Rate Drama"