• 4.5 MBS up 13 ticks at 100-03
  • 10yr Tsy up 9 ticks , yields more than 5bps better at 3.85
  • Stocks better as well, with S&P up 4 pts to 1198

Treasuries and Stocks are "buying the rumor" today, unfortunately, one of them will likely turn out to be wrong. 

Here is the FN 4.5:

The 10yr is at 3.85...

Though there are several ways to approach the strength in bonds this afternoon, leading candidates include upcoming Federal Reserve speakers who have been generally supportive of a low interest rate environment and the perception that the stock rally is overdone in lieu of what is anticipated to be a round of earnings that does not justify current stock prices.  Combine that with uncharacteristically low expectations for inflation and bonds don't see much of a problem heading down to test the next technical level in yields around 3.85 on the 10yr.

That has left MBS much better off today as basically all the artificial price drop from the settlement of April coupons has been recaptured on the current May coupons, now trading at 100-03--right where april coupons left off on Friday night. 

Reprices for the better have been and will continue to be seen in the immediate future.