To be fair to the entire bond market, Treasuries actually didn't fade that much.  After making it into the 2.47's, 10yr yields are drifting sideways near 2.50--still more than 0.04% lower on the day, meaning they've given back only about a third of the day's gains.

MBS, on the other hand, haven't even managed to hold on to a third of the day's gains.  Fannie 3.5s were up over half a point at the highs and are now coasting sideways, just 4 ticks (.125) higher than yesterday's latest levels.  As you can imagine, almost every lender repriced on that weakness.

The gorilla in the room today was European bond markets again, followed by a tradeflow snowball domestically.  More simply put, European trading helped bond markets get back to positive territory even after stronger economic data.  Traders who had been planning on rates moving higher after that data were then caught offsides and scrambled to head back lower in rate.  That simply pushes yields lower, forcing more traders to get on board or face potentially bigger losses.

European trading helped the tone stay positive through the morning and after Europe closed, US bond markets began heading back in the other direction.  MBS took this harder than Treasuries, mostly because of how well they had been doing yesterday and this morning.  In other words, these sorts of rallies normally see Treasuries outperforming MBS to a greater extent, but demand (for MBS relative to Treasuries) stayed strong in the morning.  It returned to more normal levels in the afternoon.

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
98-17 : +0-07
FNMA 3.5
102-17 : +0-04
FNMA 4.0
105-14 : +0-01
2 YR
0.3589 : -0.0081
10 YR
2.5000 : -0.0440
30 YR
3.3319 : -0.0431
Pricing as of 5/15/14 4:11PMEST

Today's Reprice Alerts and Updates
A recap of Alerts and Updates provided to MBS Live subscribers.
2:18PM  :  ALERT ISSUED: Negative Reprice Risk Increasing as MBS hit New Lows
12:10PM  :  ALERT ISSUED: Negative Reprice Risk Can't be Ruled Out in Some Cases
9:59AM  :  Back to New Highs; Positive Reprice Potential for Early Lenders
9:04AM  :  Bond Markets Bounce Back After Losing Ground on 830am Data Glut

MBS Live Chat Highlights
A recap of featured comments from the Live Discussion on the MBS Live Dashboard.
Jason Anker  :  "locking everything, dont trust this rally at all"
Matthew Graham  :  "definitely makes sense to respect 2.47. The consequences grow more serious the longer we go without breaking through."
Brian Bockholdt  :  "Can dips like this ever just be a little profit taking?"
Matthew Graham  :  "yes, any move can be profit-taking. "
Matthew Graham  :  "a move higher in MBS Prices can be profit-taking by short-sellers"
Brian Bockholdt  :  "Seems like mid day ish during big rallies there's often a dip"
Matthew Graham  :  "most of the time, however, a move starts for a different reason and then there's a domino effect from "trailing stops." Just a fancy way of saying I'm not going to take profits when MBS hit highs--rather, I'd wait until they start coming off the highs by a predetermined amount. Once I've had enough weakness, I sell. That way, I don't lose out on any further gains that might be coming."
Matthew Graham  :  ""Seems like mid day ish during big rallies there's often a dip" - excellent observation, and there's a very light-bulb-ish reason. Anyone want to take a stab at it? It's something we've touched on occasionally. "
Brian Chernega  :  "Eu markets closed"
Matthew Graham  :  "winner"