Without too much regard for European bond markets or Greek headlines (despite what you might have heard), US bond markets were stronger this morning.  The 'disregard' was primarily evident in the overnight session where Treasuries stayed exceptionally flat despite volatility in German bond markets.  It wasn't until the 8:20am CME open that Treasury traders (some of whom have to wait until then to put in some bigger trades from the early morning hours) showed their hand.  This was really the only event of the day for Treasuries and MBS.  The rest of it was spent grinding perfectly sideways and perhaps slightly higher.

2015-6-19 Dashboard

Let's talk some more about this disregard.  San Francisco Fed's Williams put it well today when he said the baseline forecast is that Greece doesn't pose big risks to the Eurozone, but 'tail risk' is a worry.  That's sort of like a "best we can tell, this isn't looking as serious as 2011-2012" type comment, but admits that things could always go wrong that we haven't even considered--unlikely things, but big things.  That's essentially what tail risk is: less like, more serious eventualities.  I'd tend to agree with Williams here. 

Even though most news outlets seem to disagree, that may be more to do with the fact that there's just not much else going on in the news right now.  I've also seen traders commenting that Greece is a factor, on camera anyway.  On paper, it's a different story.  For example, the GREK exchanged traded fund that moves higher when Greece's outlook improves did just that today.  To hear the news tell the story, the tenuous situation in Europe is an 11th hour kind of deal and something really bad could happen!  But again, GREK moved higher. (Greek yields also closed lower than yesterday, though that's not pictured in this chart) Can't make this stuff up...

2015-6-19 Bunds and Greece

Long story short, "strong hands" wanted to buy bonds today, regardless of Greek news.  So they did.  We don't know why, nor will we.  But we can guess all day long.  Maybe it's an ongoing reaction to the Fed?  Maybe it's an ongoing bounce lower from hitting recent highs (technical ceiling at 2.50% for now?).  Whatever it is, its starting to look a bit better than May's corrective bounce--almost good enough to trust... almost.

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
100-03 : +0-12
FNMA 3.5
103-15 : +0-10
FNMA 4.0
106-07 : +0-07
2 YR
0.6210 : -0.0160
10 YR
2.2650 : -0.0690
30 YR
3.0560 : -0.0740
Pricing as of 6/19/15 3:49PMEST

Today's Reprice Alerts and Updates
A recap of Alerts and Updates provided to MBS Live subscribers.
10:08AM  :  Greece? No. US Bond Markets Rallying for Their Own Reasons

MBS Live Chat Highlights
A recap of featured comments from the Live Discussion on the MBS Live Dashboard.
Matthew Graham  :  "BB, this is another way to address "what is tail risk" question: http://mndne.ws/1GWhV14"
Victor Burek  :  "its always the unexpected that causes the issues"
Brent Borcherding  :  ""there is not a housing bubble""
Matthew Graham  :  "could be, probably won't"
Sung Kim  :  "The "expected" risk is not large "
Matthew Graham  :  "it means Greece most likely doesn't pose a big risk. Trading levels confirm and suggest the same, but he's also saying no one can rule out that it could be bad. It just probably won't be. "
Brent Borcherding  :  "Exactly, so to say it doesn't pose "big risk, and then to continue really means this could be really bad."
Matthew Graham  :  "originally, tail risk referred to a measurable move of 3 standard deviations in an asset price, but it's grown to mean something like "unlikely wild card that we can't really predict, and whose size we can't really determine""
Sung Kim  :  "And I think that tail risk is fatter than what people are assuming now"
Brent Borcherding  :  "So, then that does mean that Greece pose risks."
Sung Kim  :  "The minuscule probabilities that we are unable to quantify and could cause chaos "
Sung Kim  :  "The risk you don't know about "
Brent Borcherding  :  "What specifically does he mean by "tail risk"?"
Matthew Graham  :  "well-stated by Williams"