Much like the magic that happens when you give an old wooden paddle-ball/string toy to a kid raised in the electronic generation, markets found a surprisingly high entertainment value in a very mundane trading range this morning.  If that analogy doesn't resonate with you, here are the unadorned facts.

We've seen 4 prominent changes in tone in the first three hours this morning.  Despite being well-contained by the recent trading range, Treasuries and MBS have managed to go on seemingly quick runs to new intraday highs and lows.

The first move of the day was quickly into weaker territory following the stronger-than-expected Durable Goods data at 8:30am.  Whether it was because the data had weak internals (and it did) or due to a technically supportive ceiling in Treasuries, the weakness reversed course and gave way to positive territory about half an hour later.

A strong reading on Markit's Purchasing Manager's Index (PMI) for the services sector combined with comments from European Central Bank President Mario Draghi at 9:45 to push MBS and Treasuries back into negative territory.   From there, the same technical support kicked in for Treasuries (marked by 2.55% in 10yr yields), and bond markets bounced back toward unchanged levels.

Specifically, 10yr yields are almost perfectly unchanged at the moment, and MBS are 1-2 ticks stronger.   There were no discernible reactions to home price data at 9am (stronger than expected), nor to the Consumer Confidence data at 10am (as expected).


MBS Pricing Snapshot
Pricing shown below is delayed, please note the timestamp at the bottom. Real time pricing is available via MBS Live.
MBS
FNMA 3.0
98-13 : +0-01
FNMA 3.5
102-19 : +0-02
FNMA 4.0
105-19 : +0-01
Treasuries
2 YR
0.3546 : +0.0086
10 YR
2.5338 : +-0.0002
30 YR
3.3900 : -0.0080
Pricing as of 5/27/14 11:59AMEST

Morning Reprice Alerts and Updates
A recap of Alerts and Updates provided to MBS Live subscribers.
11:02AM  :  Even Faster Than it Arrived, Weakness Evaporates
10:43AM  :  ALERT ISSUED: Back into Weaker Territory After Data, Draghi, and Stock Open
9:33AM  :  Bond Markets Back to 'Unchanged' Ahead of Confidence Data
8:44AM  :  Bond Markets Weaker After Durable Goods Data

Live Chat Featured Comments
A recap of featured comments from the Live Discussion on the MBS Live Dashboard.
Christopher Stevens  :  "Interesting take on QE and Fed in Barons. http://mndne.ws/1nPwNSP"
Sung Kim  :  "She said 90% of spending can be explained by inflation and there is no unit growth - that's crazy"
Matthew Graham  :  "RTRS- US APRIL DURABLES ORDERS +0.8 PCT (CONSENSUS -0.5 PCT) VS MARCH +3.6 PCT (PREV +2.5 PCT)"
Matthew Graham  :  "RTRS - U.S. APRIL DURABLES EX-DEFENSE ORDERS -0.8 PCT VS MARCH +2.9 PCT (PREV +1.9 PCT)"
Ted Rood  :  "Looks like market momentum still favors MBS, given the rapid recovery from Durables numbers. "
Hugh W. Page  :  "CS good article and a compelling argument. I guess we'll see soon if tapering will be a problem now that there's a deficit in buyers."
Matthew Graham  :  "RTRS- US MARCH HOME PRICES IN 20 METRO AREAS +1.2 PCT SEASONALLY ADJ (CONSENSUS +0.7) VS +0.8 PCT IN FEBRUARY - S&P/CASE-SHILLER"
Gus Floropoulos  :  "rates need to stay low to support these rising values "