Heading into Good Friday weekend, it's not uncommon for bond markets to retrace whatever the trend happens to be earlier in the week.  In other words, if bonds were rallying (as they were this week), they tend to stop rallying.  Combined with the characteristic drop in volume, this phenomenon isn't any more complicated than a simple "paring of positions heading into an extended weekend.

That same old pattern looked to be repeating through today's morning hours, but things changed abruptly just after the noon hour.  Stocks began losing ground fairly quickly and headlines came out regarding a big bomb dropped by the US in Afghanistan (The "mother of all bombs" or MOAB, as it were--the biggest non-nuclear bomb available).  It's not abundantly clear which way the causality was flowing, but at the very least, I would have wanted to see an indicator like Yen reacting more if I were to attribute all of the move to the bomb headlines.  

The cause and effect debate is neither here nor there.  Through some combination of the headlines and the stock losses, bonds found justification to buck their historical trend and eke out modest gains on a day where they typically wouldn't.  The fact that it happened at the bottom of a 5.5-month rate range makes it all the more impressive.

For a more detailed discussion on why we are where we are, and what's going on in general, MBS Live subscribers can check out the attached video.  Subscribers should also be sure to sign up to receive the daily "Huddle," a bullet-pointed distillation of all the day's relevant news and market moving considerations, as well as key technical levels and lock/float guidance for multiple levels of risk tolerance.