• Stock rally hurts bonds
  • Even before that, corporate issuance added pressure
  • New March trading position-taking (and ultimately, profit-taking and stop-losses) also contributed to the snowball
  • ISM data was a focal point for the volatility.

The S&P gained more than 40 points today.  In a world where we've often observed that bond markets can continue to experience happy days as long as stocks are in distress, that tells us much of what we need to know.  But there's certainly more to the story.

It is interesting to note that bond markets led today's charge toward higher yields (and higher stock/oil prices).  Both US and European yields surged mercilessly following the 10am economic data.  As I discussed in one of today's several reprice alerts on MBS Live, the ISM Manufacturing data wasn't a huge market mover because it was so strong.  Rather, it put a firm foot down against a rather troubling trend.  If past precedent is any guide, today's data is the sort of reversal that could put an end to the current recession in manufacturing data.  Here's the chart from earlier today showing the ISM bounce.

2016-3-1 ism close

Elsewhere in the world of bond market negativity, corporate bond issuance continued to weigh on the overall supply picture and tradeflows continued to reshuffle as a new month of trading positions took shape.  Speaking of those positions, we do know there were plenty of "longs" in the market (those betting on rates moving lower).  We also know that they got steamrolled fairly quickly this morning (i.e. forced to sell in order to prevent further losses).  This certainly added to the morning's snowball move.  By the time stocks and oil got involved, most of the drama had already passed for bond markets.

10yr yields ended the day up 9bps at 1.827--notably below the important 1.84% technical level.  That's something we can take some solace in, as long as it remains unbroken.  Fannie 3.0s fell 3/8ths of a point, with most lenders seeing roughly half a point of weakness from rate sheet print times.  Negative reprices were widespread. 

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
102-07 : -0-11
Treasuries
10 YR
1.8270 : +0.0870
Pricing as of 3/1/16 5:43PMEST
Today's Reprice Alerts and Updates
A recap of Alerts and Updates provided to MBS Live subscribers.
2:48PM  :  ALERT ISSUED: Lingering Negative Reprice Risk
12:08PM  :  ALERT ISSUED: Negative Reprices Virtually Guaranteed
10:26AM  :  ALERT ISSUED: Negative Reprices Increasingly Possible as Bonds Swoon Post-ISM
10:04AM  :  ALERT ISSUED: First Move is Weaker Following ISM
9:58AM  :  Secret Overnight Support Levels; Roughly Unchanged Ahead of ISM
MBS Live Chat Highlights
A recap of featured comments from the Live Discussion on the MBS Live Dashboard.
Dominick Cordone  :  "have your bor call 800-TAX-FORM (800-829-3676), hit 1 for English, then 0 to get someone. Ask for 2013/2014 and they will ask for identifying info and that if they are standing by the fax that they are coming to…but will fax right away"
Ted Rood  :  "he charges us $50 each time he does that, Clay, please pay attention this time."
Clay Schmeisser  :  "please share again DC"
Dominick Cordone  :  "CS I posted a few ways to get insta scripts....if that's your issue"
Christopher Stevens  :  "4506's will be the death of me."
Matt Hodges  :  "a buyer called and said most of my earnings are all under the table. How can you help me? me: Report all of your earnings to the IRS. She didn't like that answer."
Justin Brilman  :  "Michael not likely to be today....markets were waiting for this"