Ongoing Positive Reprice Potential
Long story short, financial markets braced for impact from the ECB (the impact of too many words and not enough action), but the ECB bowled right down the middle of expectations. European bonds, currency, and US markets have been progressively coming to terms with that this morning, resulting in the best levels of the day for bond markets.
At a mere 2bps from yesterday in 10yr yields, the rally is far from intense day-over-day, but it's a good move down from earlier volatility. Peak to trough, yields are down from 2.647 to 2.584. Fannie 3.5s are up from 101-30 to 101-15--better than half a point trough to peak.
Some lenders were generating rate sheets when prices were looking more trough-ish. They continue to be relatively likely to reprice positively. The most recent batch of gains even puts other, later-pricing lenders in a position to consider reprices.
At current levels, we've ALMOST undone 1 of the past 4 days of bond market weakness. Pretty anticlimactic, but definitely better than the alternative. The most promising feature of the current landscape is the potential for 10yr yields to pivot at 2.60. They'll need break below 2.57 to make it official.