As far as bad days go for bond markets and MBS, today was about as bad as it gets. 10yr yields hit their 3pm close about 16 bps higher than yesterday. Fannie 3.5's are down 26/32nds, something they've not done since 9/23/11.
Although the periodic MBS MID-DAY and RECAP posts that go out to the MBS Commentary channel do a good job of conveying market movements and community activity, I personally, am not able to conjure up much by way of charts or analysis on days like today. Reason being: I'm first and foremost engaged in interacting with the MBS Live community in the live chat window as well as manning the reprice alarms for the live updates that MBS Live sends out via text message and email to our users.
Bottom line, I just wanted to offer a quick apology that I haven't been able to publish any content earlier than now, but also wanted to take the opportunity to let anyone who didn't already know, that there's live analysis, live prices, live interaction with me and 100's of other mortgage professionals every day on the MBS Live Dashboard. Volatile markets like this make for good opportunities to do a 2-week trial if you haven't already. (testimonials and more info).
Back to markets...
Here's what the release of the stored energy looks like over the past two days in terms of 10yr yields:
Bond markets had been so tediously flat and uninspired for so long that by the time the notion that this could be THE big break out caught hold, the snowball of selling had already begun and didn't let up until until some major technical support levels were tested. MBS Live contributor and a good friend Victor Burek asked in the Live Chat this morning where the next support levels were for 10's after we began the morning in the high 2.1's.
My answer: "If we don't close under 2.14 today, there is not much to go on except some of October's pivots in the mid 2.2's. with 2.3 probably being the most noticeable."
Even though I answered according to the information I had on the charts, I didn't think these support levels would be tested this soon. In fact that's the reason I put the "if we don't close under 2.14" caveat in there, as I didn't even anticipate it would happen today. But yields made a bee-line for those "mid 2.2's" and ground around just under 2.25 from 10am to 1pm. Ugly stuff... Then the embarrassing 30yr Bond Auction paved the way for 10's to hit 2.29 at their highest today.
The long term chart for MBS doesn't look much better. Although this was a worse day of losses relative to their previous sell-off's, they're still in the middle of their broader range since August's FOMC Announcement (exactly in the middle in fact) whereas 10yr yields are markedly closer to their highs. The retracement lines included on the chart may or may not prove to be of technical significance going forward. The 50% line at 102 looks to have been supportive today and the 62% line at 101-17 saw significant activity as a pivot point in October and November, raising some hope for further support if selling continues tomorrow: