Drama is fueling a surprisingly strong 2014 rally in US bond markets.  Most of that drama has to do with the European economy and geopolitical risks outside the US, but Treasuries and MBS would rather swim with the tide of global fixed-income demand.  Thus we find ourselves "rallying until we're no longer rallying."

Last week brought news that Ukrainian forces had blown up part of a Russian "armored column"--whatever that is.  Early newswires for Monday now suggest a potential deescalation.  Actually, see if you can figure out what Russia's Foreign Ministry is saying here (these are actual words in the newswire from Reuters, split into bullet points in order to help us divide and conquer the dizzying logic.

  • Agreement reached
  • For forther talks
  • Which could produce proposals
  • for Ukraine crisis de-escalation.

So to recap, at least we've agreed to talk about possibly proposing a plan to deescalate.  What commitment!  What utterly precise and forceful action!  (And we wonder why this conflict continue to fuel market uncertainty... or do we?).

Last week's rally was so decent that any further improvements would require another similarly momentous day of headlines.  Bond yields are pushed right up against the lower edge of their recent trend.  Any major suggestions to move in the other direction would be well-met both by bears who think it's finally time for rates to go higher, as well as bulls who wouldn't mind giving the rally a chance to recharge.

2017-8-17 tsy

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
99-10 : +0-00
FNMA 3.5
102-27 : +0-00
FNMA 4.0
105-27 : +0-00
2 YR
0.4230 : +0.0120
10 YR
2.3640 : +0.0190
30 YR
3.1490 : +0.0150
Pricing as of 8/18/14 7:34AMEST

Tomorrow's Economic Calendar
Time Event Period Forecast Prior
Monday, Aug 18
10:00 NAHB housing market indx * Aug 53 53
Tuesday, Aug 19
8:30 Housing starts number mm (ml)* Jul 0.969 0.893
8:30 Core CPI mm, sa (%)* Jul 0.2 0.1
8:30 Building permits: number (ml)* Jul 1.000 0.973
Wednesday, Aug 20
7:00 Mortgage Market Index w/e 337.7
Thursday, Aug 21
8:30 Initial Jobless Claims (k)* w/e 300 311
10:00 Philly Fed Business Index * Aug 19.2 23.9
10:00 Existing home sales (ml)* Jul 5.02 5.04