It could have been a lot worse!  That's a great theme for today's bond market action.  Yesterday was the kind of rally where traders buy bonds first and ask questions later.  Those questions are typically asked in the form of bond selling on the subsequent day (today).  As such, we were well within our rights to expect a pullback today, and we barely got one!

10yr yields managed to end the day only half a bp higher at 2.228.  That's impressive given that the stock market was able to retrace quite a bit more of its move from yesterday and that there were several unfriendly headlines throughout the day.  On the other hand, 10yr yields managed to move up to 2.228 after being as low as 2.18 overnight, but I'd argue that the 2.18% had more to do with overseas markets taking their turn on yesterday afternoon's domestic market movement.

All that might sound bond-bullish, and I suppose if that's how you want to feel about this, you certainly have justification.  And while I wouldn't necessarily make any cases for today being "bond-bearish," I would say that both sides of the market will likely continue to be highly susceptible to the right headlines.  As for what the right headlines might be?  Traders will know them when they see them, and we'll know it a few seconds later.  Until then, there are good arguments to avoid big rallies or sell-offs into the weekend.


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
103-03 : -0-04
Treasuries
10 YR
2.2277 : +0.0117
Pricing as of 5/18/17 7:02PMEST

Today's Reprice Alerts and Updates
A recap of Alerts and Updates provided to MBS Live subscribers.
2:00PM  :  ALERT ISSUED: Reprice Risk Returns
12:08PM  :  Reprice Risk Ebbs as Stocks Top Out
10:34AM  :  ALERT ISSUED: Illiquidity Distorting MBS Losses, But There is Some Risk
9:48AM  :  ALERT ISSUED: Back to Unchanged After Opening Stronger

MBS Live Chat Highlights
A recap of featured comments from the Live Discussion on the MBS Live Dashboard.
Matthew Graham  :  "one other newswire in the vicinity of this move: TRUMP ADVISERS SAID TO URGE HIM TO HIRE OUTSIDE LAWYER: NYT"
Matthew Graham  :  "RTRS - TREASURY'S MNUCHIN SAYS HAS HAD DISCUSSIONS WITH UK ON BILATERAL TRADE DEAL"
Matthew Graham  :  "opposite of what Bullard said. No unified theme on "balance sheet vs hikes" yet."
Matthew Graham  :  "RTRS - MESTER SAYS ONCE DECIDE ON PLAN FOR BALANCE SHEET, SHOULD STICK TO IT AND USE RATES TO RESPOND TO ECONOMIC OUTLOOK"
Matthew Graham  :  "RTRS - MESTER SAYS SHE IS COMFORTABLE WITH CHANGING FED'S BALANCE SHEET POLICY THIS YEAR"
Matthew Graham  :  "RTRS - MESTER SAYS DELAYING RATE HIKES FOR TOO LONG RISKS RECESSION"
Matthew Graham  :  "RTRS - FED'S MESTER SAYS FURTHER RATE HIKES WILL BE NEEDED IF ECONOMY EVOLVES AS EXPECTED"