Today will either go down as a game-changing rally in the course of bond traders' decision making process for 2017, or as an epic head-fake that provided LO's a great opportunity to lock a few top tier deals at sub 4% 30yr fixed rates.  Either way, we rallied in a major way.

The move began as early as yesterday afternoon, albeit after market hours.  The leading edge of the drama was apparently a New York Times article suggesting former FBI Director Comey had evidence that Trump asked him to back off on the investigation into former National Security Advisor Flynn's communications with Russia.  The conclusion by the NYT and others was that such evidence could be demanded by a congressional oversight committee and ultimately result in Trump's impeachment.  

As soon as tweets and newswires began coming out from actual members of congress with the "I" word, markets began reacting.  The increased liquidity following the morning opening bells (820am CME and 930am NYSE) facilitated a massive acceleration of the overnight trade.  In other words, the bulk of American investors were done for the day by the time this news started hitting overseas markets, and they wasted no time getting caught up as soon as they began their trading day today.

The net effect was a 10+bp rally in 10yr yields (2.22% at the close) and a half point gain in Fannie 3.5s (103-06).  The attached video (available to MBS Live members) has a lot more info as well as lock/float strategy considerations.


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
103-06 : +0-16
Treasuries
10 YR
2.2225 : -0.1045
Pricing as of 5/17/17 5:31PMEST

Today's Reprice Alerts and Updates
A recap of Alerts and Updates provided to MBS Live subscribers.
9:21AM  :  Massive Snowball Buying in Bonds Right Now

MBS Live Chat Highlights
A recap of featured comments from the Live Discussion on the MBS Live Dashboard.
Sung Kim  :  "i was thinking 6.29% but you are close"
John Tassios  :  "agreed MG. proposed policies may be DOA rest of the year, esp in the senate. plus, mid-terms, so nothing big will be done in 2018."
Brent Borcherding  :  "5% of this is based on talk about impeachment."
Sung Kim  :  "yep, it's def not about the event itself"
Matthew Graham  :  "As long as they're being honest about not forecasting fiscal policy, because I think the market reaction at the moment has far more to do with fiscal policy implications than impeachment."
Sung Kim  :  "ah, as long as above 60% they hike"
Matthew Graham  :  "We dropped from 74 to 65% from yesterday, based on CME."
Matthew Graham  :  "we're about halfway between there and May 10th levels"
Matthew Graham  :  "it's not that much in the bigger picture. Rate hike expectations were much lower in mid April"
aaron meyer  :  "What % do you think the Fed raises in June?"
Sung Kim  :  "traders going to get their books smashed if they are reducing expectations based on this tape bomb"