Bond markets lost every bit as much ground as they could lose today without actually violating the recent range.  In terms of 10yr yields, that's 2.57 to 2.66 and 10's are drifting out the door at 2.655 currently.  In terms of Fannie 3.5 MBS, the lower end of the range is near 101-21, and today's low was 101-22.

Of all the crazy things to kick this move off, it looks to have been this morning's CPI data.  That's particularly odd considering the 4+ years of essentially no reaction to all sorts of inflation data.  What gives?

Traditionally (i.e. before the financial crisis and QE years), bond markets (i.e. "rates") were fairly reliable in adjusting based on inflation expectations simply because higher inflation hurt the value of bonds, thus raising rates. Today's reaction in bond markets was to the fact that improving inflation metrics will steel the Fed's resolve when it comes time to finally lift-off from the extended stay at a 0-.25% policy rate window.

Tomorrow brings the important FOMC Announcement where the Fed releases its periodic, official monetary policy stance. That part isn't expected to change much, if at all, but there are other FOMC events to consider. At the same time as the Announcement (2pm), we'll also get the Fed's updated economic projections. These were a major market mover the last time we got them in March. Half an hour later, Fed Chair Yellen conducts a press conference which also had a noticeable effect in March as Yellen candidly referred to a specific time frame for rate hikes.

Bottom line: even though markets are not expecting a major policy shift, the instances of the FOMC Announcement that are accompanied by the forecasts and the press conference ALWAYS stand a chance to move markets.

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
97-18 : -0-14
FNMA 3.5
101-23 : -0-13
FNMA 4.0
105-01 : -0-10
2 YR
0.4837 : +0.0167
10 YR
2.6532 : +0.0542
30 YR
3.4430 : +0.0460
Pricing as of 6/17/14 5:08PMEST

Today's Reprice Alerts and Updates
A recap of Alerts and Updates provided to MBS Live subscribers.
3:43PM  :  ALERT ISSUED: Ongoing Negative Reprice Risk
12:53PM  :  ALERT ISSUED: New Lows for MBS; More Reprice Risk
9:55AM  :  ALERT ISSUED: Adding Insult to Injury, Reprice Risk Already a Consideration
8:48AM  :  ALERT ISSUED: Bond Markets Much Weaker After Surprisingly Strong CPI

MBS Live Chat Highlights
A recap of featured comments from the Live Discussion on the MBS Live Dashboard.
Frank Hanna  :  "since it is the landlord your may be able to structure because of "intereseted party" rules. I think LTV caps are at 75%"
Frank Hanna  :  "MH on your below scenario can that 50k be done as a gift of equity since the seller is also the landlord and an interested party?"
Ted Rood  :  "have to agree, MH."
Matt Hodges  :  "odd ball question - client rents the house they intend to purchase. she has put in over $50K in renovations. My underwriter doesn't want to credit that towards down payment - sweat equity argument, if not paid to the seller. Thoughts?"