As far as bond market rallies go, today's was one of the most mysterious in recent memory.  Several conclusions will have to be jumped to in order to assign any semblance of causality.  

One of the best, simplest arguments for latent bond market strength is the fact that the risk barometer du jour--Yen-- had begun a strong move lower (stronger Yen) yesterday.  That trend helped arrest yesterday's rising rates despite relentless stock gains.  Then today, as soon as stocks faltered, rates were instantly ready to pay more attention to the Yen move that had continued unabated.

2017-2-16 close

If you want to add an extra twist to this narrative, consider this article that came out shortly before today's rally began.  Investors would be considering its point (perpetual legal imbroglio for Trump) moments before he was set to give a SOLO press conference (initially billed as "a rally"), all on a day where stocks looked like they might be getting tired after a heroic streak of 5 record highs in a row.  

Like I said, a few conclusions would need to be jumped to, but it would be more difficult to disprove that all of the above factored into the decision to make today a "correction day" for the recent trends in bonds and stocks.  Incidentally the best way to disprove it would be to say that bonds obviously intended to rally today because they essentially lost no ground following an exceptionally strong Philly Fed index at 8:30am.  But there again, we could point to the 2-day move in Yen and say bonds already found their ceiling and were just waiting for the opportunity to move in the other direction.


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 3.5
102-05 : +0-10
Treasuries
10 YR
2.4467 : -0.0553
Pricing as of 2/16/17 5:37PMEST

Today's Reprice Alerts and Updates
A recap of Alerts and Updates provided to MBS Live subscribers.
1:20PM  :  MBS Illiquidity Making Losses Look Bigger; Limited Reprice Risk
11:08AM  :  Noticeable Shift in Tradeflows; Bonds Rallying
8:47AM  :  Big Beat in Philly Fed Exposes Potential Secret Strength in Bonds

MBS Live Chat Highlights
A recap of featured comments from the Live Discussion on the MBS Live Dashboard.
Brent Borcherding  :  "It could go either way, of course, and I obviously don't know. However, its just difficult to see how 8 years into this now things would take off. In fact, I don't think history would be on that side."
Ted Rood  :  "I would say option #B"
Brent Borcherding  :  "What seems more likely after 8 years into a "recovery" -- it finally takes off and we have a few years of large growth ahead or the recovery peters out after the gov't intervention that has been used to provide the paltry growth we've had is removed?"
Matthew Graham  :  "not the least of which being the fact that people who think they'll go down eventually would still like to see them go up some more."
Sung Kim  :  "There are more reasons why rates could go up versus going down IMO"
Matthew Graham  :  "oh, I've been counting. We're at 7."
Brent Borcherding  :  "The new year has started with great optimism for "this is the year we get it going", but the problem is, I've lost track of how many years in a row that's been the mantra."
Matthew Graham  :  "There will be fear about that, BB. As to whether or not it's justified, I wish I knew. I have my doubts though... as you know."
Brent Borcherding  :  "Yes, but will there ever actually be sustained growth over 2%?"
Matthew Graham  :  "weekly newsletter is out. My guess is that you'll find it to be a thorough (yet tangible?) discussion on the "inflation vs rates" saga."
Matt Hodges  :  "Philly crushed expectations, yet we rallied. The force is strong"
Tom Bartlett  :  "I agree we have held the 2.53-2.55 range very well which makes it a low risk wait and see...."
Matt Hodges  :  "8:47 update, Tom: If bonds end up absorbing this sort of data and remaining green this morning, it would say a lot about the underlying bullishness that seems to keep coming into play as 10yr yields bounce in the mid 2.5's (i.e. we bounced at 2.53% yesterday and are now holding ground. Similarly, bonds bounced at 2.55% on January 26ths and then moved lower for several days.)"
Jason Anker  :  "no Tom, not yet"
Matt Hodges  :  "whatever we do, we should make a pact and all either float or lock"
Tom Bartlett  :  "who believes we should float on 30 day out deals right now?? thinking it is a good lock day?"