Today was decidedly negative for bond markets.  10yr yields found no solace in "the gap" from 2.26 to 2.28 and instead moved right through to 2.30.  There are other potentially supportive ceilings overhead, but we would have liked to have seen stronger support at the gap in order to maintain a more bullish stance.

In simpler terms, it's OK that rates have been moving higher.  It's a normal aftershock following big moves like that seen last Wednesday.  It would have been even more OK if they'd stopped moving higher yesterday.  The fact that they did not suggests a defensive approach heading into next week's FOMC Announcement and Treasury auction cycle. 

On a positive note, we did get some good information about current trading motivations.  US bond markets opted to follow European bond markets as opposed to stocks.  That wasn't clear at first because everything was moving together, but then at the noon hour, Treasuries continued weakening even as stocks pulled back.  A quick look to the final hour of European bond market trading revealed a much better correlation.  It might not be the whole story, but it's definitely a story.

2014-10-23 caveman

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
100-10 : -0-11
FNMA 3.5
103-16 : -0-08
FNMA 4.0
106-04 : -0-05
2 YR
0.3940 : +0.0320
10 YR
2.2770 : +0.0570
30 YR
3.0490 : +0.0550
Pricing as of 10/23/14 5:32PMEST

Today's Reprice Alerts and Updates
A recap of Alerts and Updates provided to MBS Live subscribers.
12:16PM  :  ALERT ISSUED: Negative Reprices Now More Likely; Things are Getting Serious
11:03AM  :  ALERT ISSUED: Negative Reprice Risk, Just Barely
10:41AM  :  Important Levels Here; Negative Reprice Risk Looming
9:23AM  :  Bond Markets on the Ropes After Weaker Overnight Session

MBS Live Chat Highlights
A recap of featured comments from the Live Discussion on the MBS Live Dashboard.
Jeff Anderson  :  "I've heard a few other sources say they thought we'd get a pretty good tick up before the next leg down. I'm ready for the uptick to be over thanks. Weak hands have been washed out hopefully."
Hugh W. Page  :  "I think the medium to longer term trend lower is intact but in the short term we can easily bounce much worse from here."
Matthew Graham  :  "That's the mainstream view, I'd say. I've heard 2.40-2.60. "
Hugh W. Page  :  "Interesting. So, if we can't reverse course here soon we might be heading back to 2.50ish in the medium term?"
Matthew Graham  :  "here's the chart HP, updated with today's movement:"
Sergio Szyrko  :  "ditto"
Timothy Baron  :  "I just locked ahead of the inevitable reprices. Thanks MBS Live!"
Hugh W. Page  :  "Interesting if you look at a 1 yr chart of the 10 yr it kinda of looks like we're just regressing to the mean of a downward channel that began on literally January 1st. Hopefully the downwardness continues!"