China... Argentina... Emerging market currencies panicking over tapering... Overvalued stock markets "overdue for a correction..."  There are plenty of culprits for the big, surprising moves seen in global markets over the past two days.  But picking out any one of these factors would be to overlook what is probably the most important motivation: tradeflows.

The end of 2013 was skewed in favor of risk, stocks, etc.  It was a pretty unhappy time for bond markets, remember?  2014 has seen two instances now of that pressure being equalized--first after NFP, and the second at the end of this week.  The rush to assign blame simply fans a fire that may well have already been burning.

There was a chance that the pressure was equalized as 10yr yields ground into the 2.82 level.  After all, one of the poster-children for this "risk-off" move--the stock market--closed within striking distance of all time highs on Wednesday afternoon, with no hint of the roller-coaster ahead. 

The whole herd has quite simply moved in unison since then.  Most market participants expected things to get increasingly calm into next week, and most market participants were wrong.  When that happens, it adds not only to the pace of the ensuing move, but also to the determination to find and assign blame.   

The time to understand this wave will come as soon as the time to ride it has clearly come to an end.

MBS Pricing Snapshot
Pricing shown below is delayed, please note the timestamp at the bottom. Real time pricing is available via MBS Live.
FNMA 3.0
96-29 : +0-14
FNMA 3.5
101-04 : +0-15
FNMA 4.0
104-15 : +0-11
2 YR
0.3437 : -0.0163
10 YR
2.7260 : -0.0480
30 YR
3.6401 : -0.0419
Pricing as of 1/24/14 4:18PMEST

Today's Reprice Alerts and Updates
A recap of Alerts and Updates provided to MBS Live subscribers.
11:02AM  :  'Tail Risk' Situation Boosts Bonds; Strongest Levels of The Day
9:15AM  :  Big Improvements Overnight Moderating Into Domestic Session

MBS Live Chat Highlights
A recap of featured comments from the Live Discussion on the MBS Live Dashboard.
Sam  :  "boys, it's definitely a great day to lock!"
Victor Burek  :  "many said that same thing yesterday"
Sam  :  "it's different when I say it Vic...:)"
Victor Burek  :  "i am leaning toward locking as well"
Sung Kim  :  "these types of crises tend to play out over time do they not? the risk to not locking is some sort of positve resolution or news over the weekend, which doesnt seem probable. VIX still is not that high, seems like more downside to equity markets... you might lose some on monday, but next week will be exciting"
Victor Burek  :  "but we have fomc"
Sung Kim  :  "IMO fomc is going to take a back seat"
Sung Kim  :  "they are not going to increase, cant imagine that happening, so assuming the market is perfect, 10bn already priced in, if anything there is upside?"
Jeff Anderson  :  "Stock market still getting smoked. Stock lever seems to have disengaged a bit for now. Guess we'll see how the afternoon goes."
Matthew Graham  :  "Yen-lever is perma-engaged. Stocks are just easier to discuss/conceptualize. "
Ted Rood  :  "Wonder how much a pronounced stock selloff could impact Fed tapering sentiment next week?"
Hugh W. Page  :  "Next week will be interesting - a lot going on"