Bonds were horribly weaker yet again overnight, and the same old factors are in play.  These aren't glamorous, satisfying to understand, or easy to explain to colleagues and clients, but that doesn't make them any less relevant.

Chief among them is the tradeflow story.  Here's how I described that in this morning's update on MBS Live:

The frustrating thing about all this from a traditional market-watching perspective is that the biggest motivation for trading is TRADING itself. That's the simplest way to discuss the concept of "tradeflow considerations/motivations. Traders are forced in to new trades when certain levels are hit. Those new forced trades become the price-movers for the next forced trades, and the snowball rolls on.

Treasuries were deposited on the domestic session right in line with 2015's weakest levels.  Same story for MBS, though it would have been a close call if not for the roll (the most current Fannie and Freddie 30yr MBS coupon became June this morning after May coupons were retired yesterday.  Newer coupons have slightly lower prices, because they last 1 month longer than the coupon they're replacing.  That means investors are technically waiting an additional month before getting their principal back, which means they'd pay slightly less for the newer coupon).

The fringe benefit of beginning the day at these weaker levels is that positive reprices have come easy.  28 have been reported so far on MBS Live and more are likely on the way.  Unfortunately, they haven't even gotten us back to yesterday's levels in most cases.