Bond Markets Sparkle and Fade; Afternoon Outlook is Cloudy
Sometimes clouds mean rain is on the way, and sometimes they burn off resulting in a surprisingly sunny afternoon. Even if it rains this afternoon (i.e. "if MBS keep falling"), the morning has been positive enough and that positivity has lasted long enough to consider the day a success.
Bond markets were slightly stronger overnight on another combination of sliding stocks and Ukraine tension. Early month-end buying (what's this?) is also a consideration, though probably not a big one.
Stock prices and bond yields bottomed-out just after 11am and are still in the process of making their most meaningful correction of the session. Even then, stocks remain in negative territory, 10yr yields are still 2.75bps lower and MBS are still 3-4 ticks in the green.
Fannie 4.0s were up to 104-21 at their best levels of the day, but are currently at 104-17. Falling to these levels is not enough for much negative reprice risk, but the gains that remain intact aren't enough for any positive reprice potential either.