Today was interesting in the sense that it challenged some of the assumptions that have been easy to hold so far in 2016, namely: that bond markets were being dragged to stronger levels against their will due to losses in equities markets or general global economic concerns.

Indeed, those assumptions remain more than fair, but a day like today lets us know there's more to the story because global equities markets didn't have a terrible day, yet bonds rallied somewhat significantly anyway. 

Next on the list of usual suspects of bond market cause-and-effect is the never-ending slump in oil prices.  Today saw prices briefly trade below $30/barrel, and there was a fairly strong amount of correlation between the oil sell-off and the bond rally.  From there, justification gets more esoteric, leaning on things like position-squaring relating to the massive amount of corporate bond issuance hitting the market this week. 

Whatever the case, bond markets did better than their recent habits would suggest was even possible today.   The rest of the week could be exceptionally volatile as the record corporate bond deal discussed in this morning's update goes live.

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
100-26 : +0-00
FNMA 3.5
103-23 : -0-01
FNMA 4.0
106-05 : -0-01
2 YR
0.9280 : +0.0000
10 YR
2.1050 : +-0.0530
30 YR
2.8810 : +-0.0760
Pricing as of 1/12/16 5:35PMEST

Today's Reprice Alerts and Updates
A recap of Alerts and Updates provided to MBS Live subscribers.
2:29PM  :  What's up with this big old bond rally?
10:18AM  :  Let's Talk About Beer

MBS Live Chat Highlights
A recap of featured comments from the Live Discussion on the MBS Live Dashboard.
Matthew Graham  :  "Dry powder argument incidentally mentioned right around minute number 3 of this little beta test for a certain little something we're working on."
Matthew Graham  :  "Why yes, yes it would Dirk."
Ted Rood  :  "So could lead to massive stock selloffs?"
DIRK POSTUPACK  :  "MG...if the fed raised rates in order / have to lower, wouldn't that make the markets very skittish?"
Matthew Graham  :  "yes. We've talked about that quite a bit. "dry powder" argument."
Dio Vannucci  :  "MG, is it possible, however improbable, that the Fed raised rates just so they have something to cut when the global economy sputters like it seems to be doing?"
Matthew Graham  :  "RTRS - U.S. 3-YEAR NOTES BID-TO-COVER RATIO 2.94, NON-COMP BIDS $45.15 MLN"
Matthew Graham  :  "If that chat didn't make sense, here you go: Treasury Auction Jargon, Definition, and Significance "
Matthew Graham  :  "3yr auction coming up. Recent bid-to-cover has been declining in general from an average near 3.3 in the middle of 2015 to an average of 3.1 recently. Anything over 3.1 is healthy demand (november's auction was 2.82, for context). The 'when-issued' yield is 1.186 at the moment and 3yr auctions have tended to come in below when-issued levels by an average of 0.0033%. Indirect bidding has averaged 47%."