Thank goodness for a boring day. The alternatives would be that the mega-rally of the past two days extends further, which causes all sorts of problems for the mortgage market, or that rates snap quickly higher, which would cause another set of problems. "Sideways at recent lows" is always the best place to be.
Bond markets aren't completely sideways though. There is a bit of weakness--more visibly in MBS vs Treasuries--but not enough to undo Wednesday's range-break. Today began with an almost perfectly neutral stance and has merely leaked a little to the downside after stronger-than-expected Housing Starts data. The reaction was limited by the fact that there's really no growth coming out of the single-family construction sector.
Fannie 3.5s were off more than a quarter of a point at their weakest levels, but have gotten roughly half of that back as Treasuries broke even early in the afternoon.
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