It's the same old story for MBS: Treasuries are getting hit hard by supply pressure, both from fairly epic levels of corporate bond issuance and the regularly-scheduled levels of Treasury auctions.  Increased supply leads to lower prices and higher yields.  With Treasuries being the subject of the auctions AND the basis for corporate bond issuance (meaning Treasuries are sold to lock corporate rates), they're taking a much bigger hit than MBS.

The problem is being compounded by a big bounce back in Asian equities markets over the past few days.  This is putting general pressure on safe-haven assets that had previously benefited when Asia was leaking back to the lowest recent levels from the late-August death spiral.  Both the Nikkei and Hang Seng are well off those lows so far this week.  The Nikkei, in particular, had a tremendously strong rally after comments from Japan's central bank on lowering its inflation target and from the Prime Minister regarding lowering the corporate tax rate to bolster growth. 

To be clear though, the lion's share of the bond market weakness is attributable to the massive amount of corporate issuance. 

The tide may be turning though--at least to some extent.  The afternoon brought a well-received 10yr Treasury auction.  This could be investors' way of saying "these are the levels where we're interested in stepping in to buy the recent drop in prices."  It was far from definitive, but bonds have been trading much better since 1pm. 


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
100-19 : -0-04
FNMA 3.5
103-25 : -0-03
FNMA 4.0
106-13 : -0-01
Treasuries
2 YR
0.7570 : +0.0200
10 YR
2.2200 : +0.0340
30 YR
2.9880 : +0.0280
Pricing as of 9/9/15 1:34PMEST

Morning Reprice Alerts and Updates
A recap of Alerts and Updates provided to MBS Live subscribers.
9:31AM  :  Bond Markets Pummeled by Deluge of Corporate Issuance

Live Chat Featured Comments
A recap of featured comments from the Live Discussion on the MBS Live Dashboard.
John Tassios  :  "yep, all trying to get in last min bond offerings ahead of possible FED hike next week."
Matthew Graham  :  "oh jeez, the hits just keep coming (I'm watching deal after deal being announced on my Reuters feed). Another big one just now. No $ amount tied to these, but when you see a name like Gilead and that it will be a 6-part offerings with 3,5,7,10, 20, and 30yr tranches, you can assume it will be in the billions. "
Scott Valins  :  "Summers Wa Po article in the news stream (8:31am) is a nice read"
Matthew Graham  :  "corporate issuance is relentless this morning. Exclusively behind this move."