Bond markets have a secret.  Or rather, we have to pretend like it's a secret in order to turn something very boring into something remotely interesting.  But this way, at least if your friends and colleagues attempt to draw any overly-firm connections between market events and trading reactions, you can fire back with this:

Bond markets have simply been bouncing back from Friday's strong rally.  When you see the 5-day chart of MBS and Treasuries, it's fairly shocking.  How silly could we have been to infer any significance in the day to day events when they're now so obviously minor course corrections against this bigger picture?

2014-8-20 mbslive

Even the two times that rates gapped away from the central trend have seen a sober and definite return--almost as if they were compelled to get back in line.  That's not to say that the day-to-day events haven't actually been motivating some of the smaller movements within the broader trend, just that we can't be sure if the broader trend wouldn't have left us in the same spot today regardless.

Today's short-term market mover was the FOMC Minutes.  This wasn't too complicated actually.  It suggested the Fed was just a bit more ready to move toward rate hikes and portfolio reduction than the most recent FOMC Announcement might have suggested.  Bottom line, the Fed sees the improvements in some of the economic data, and while it's still not good enough for them, they can see that it might be good enough some time soon. 

Bond markets lost a decent amount of ground following the minutes, but gravitated back to the central tendency of the trend by the close.    MBS ended up going out the door just a tick over an eighth point weaker.


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
98-22 : -0-05
FNMA 3.5
102-11 : -0-05
FNMA 4.0
105-17 : -0-03
Treasuries
2 YR
0.4760 : +0.0490
10 YR
2.4280 : +0.0210
30 YR
3.2180 : -0.0030
Pricing as of 8/20/14 5:18PMEST

Today's Reprice Alerts and Updates
A recap of Alerts and Updates provided to MBS Live subscribers.
2:57PM  :  Finding Footing, but Some Reprice Risk Remains
2:07PM  :  ALERT ISSUED: First Move is Weaker Following Fed Minutes; Some Negative Reprice Risk
9:17AM  :  Bond Markets Slightly Weaker After Unfriendly Overnight Session

MBS Live Chat Highlights
A recap of featured comments from the Live Discussion on the MBS Live Dashboard.
Sung Kim  :  "unbelievable site!"
Sung Kim  :  "and yet another satisfied MBS Live customer"
Wendy Smith  :  "When I asked about locking before reprice, I was reading basis points as ticks (I'm used to looking at delayed pricing in ticks) and hence was thinking the reprice situation was much worse than it is. Don't do that! Decided to wait since I have time and it's a refi."
Matthew Graham  :  "Not a bad first day question Wendy! Even if we bounce back, this has been a bit too sustained to be a knee-jerk. We'll probably see a few reprices. "
Matt Hodges  :  "Wendy, the intraday lock alert is meant to do just that - alert you to the liklihood of worsening prices during the day"
Wendy Smith  :  "I'm new just today. So are any of you locking before what seems a likely reprice for the worse? Or is that knee-jerk?"
Matthew Graham  :  "RTRS - SEVERAL PARTICIPANTS FELT UPSIDE INFLATION RISKS HAD NOT INCREASED, A FEW OTHERS FELT THEY HAD"
Matthew Graham  :  "RTRS - MOST FOMC PARTICIPANTS SUPPORTED REDUCING OR ENDING PORTFOLIO REINVESTMENTS AFTER FIRST RATE HIKE, DON'T WANT TO SELL MBS"
Matthew Graham  :  "RTRS- FOMC PARTICIPANTS AGREED FED'S BALANCE SHEET SHOULD BE REDUCED GRADUALLY, PREDICTABLY, EVENTUALLY BE MAINLY TREASURIES"
Matthew Graham  :  "RTRS- MANY FOMC MEMBERS FELT CHARACTERIZATION OF "SIGNIFICANT" LABOR MARKET SLACK MAY HAVE TO CHANGE BEFORE LONG"
Matthew Graham  :  "RTRS - MOST FED POLICYMAKERS WANTED MORE EVIDENCE BEFORE CHANGING RATE HIKE VIEWS, SOME FELT "RELATIVELY PROMPT" MOVE WARRANTED"
Matthew Graham  :  "RTRS- FED POLICYMAKERS IN JULY FELT U.S. LABOR MARKET PROGRESS HAD BEEN FASTER THAN EXPECTED, BROUGHT CONDITIONS "NOTICEABLY CLOSER" TO NORMAL - FOMC MINUTES"
Gary Bracht  :  "CS, in today's environment, I won't try to qualify with it. What type of loan? Has any bonus been paid yet?"
Clayton Sandy  :  "question on bonus income- I have a borrower who has been on commission forever. His new job has a strong base and bonus, but no commission. Old job had small base and a lot of commission. You think I can make a case to use the new bonus income since he had commission with his old job?"