Today was bittersweet for bond markets, with strong gains in the morning, and an almost complete reversal by the end of the day.  As expected, the early focus was on the CPI/Retail sales data duo at 8:30am.  Both were bond-friendly, and an unsurprising rally ensued.  Actually, to be fair, the rally was perhaps a bit on the aggressive side given the tenor of the data.

In other words, a quick drop to 2.28% in 10yr yields seemed like a strong reaction based on the numbers (+1.7 vs +1.7 core annual CPI and -0.2 vs +0.1 Retail Sales).  This might have been our first clue that the rally was forcing the hands of those holding short positions (bets on rates moving higher), who would cover those bets by buying bonds.  

Shorts aren't the only bets out there.  More than a few bond traders decided to recommit to buying at the beginning of the week as supportive ceilings remained intact (such as 2.42% in 10yr yields).  Those "long positions" (bets on rates moving lower) were profitable enough in many cases to justify the booking of some quick profits as the week drew to a close.  

Europe led the way in this endeavor with German Bunds fully erasing the day's gains by the European close.  US traders followed suit, ultimately parking trading levels near Wednesday afternoon's post-Yellen range--a noncommittal way to end the week and remain nimble for the week ahead.

2017-7-14 close


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
102-20 : +0-02
Treasuries
10 YR
2.3319 : -0.0161
Pricing as of 7/14/17 4:57PMEST

Today's Reprice Alerts and Updates
A recap of Alerts and Updates provided to MBS Live subscribers.
3:58PM  :  ALERT ISSUED: Reprice Risk Edges Higher (Mostly For Those Who Haven't Seen One Yet)
11:48AM  :  ALERT ISSUED: Negative Reprice Risk Increasing
10:42AM  :  ALERT ISSUED: Under Pressure Into EU Close; Potential Reprice Considerations
8:34AM  :  Bonds Rally on Week Retail Sales/CPI Data

MBS Live Chat Highlights
A recap of featured comments from the Live Discussion on the MBS Live Dashboard.
Dan Shapiro  :  "beautiful day for rates even with the repricing... rates are going lower next week IMO"
Steve Chizmadia  :  "If this were the other direction we'd have maybe 2-3 price improvements."
Steve Chizmadia  :  "Thanks MG, snuck a few in with Flagstar before the reprice you saved 3 of my clients on average $800 in fee/loan"
Andrew Horowitz  :  "take what juice you gained today lock and move on"
aaron meyer  :  "me too"
Brian Bockholdt  :  "I really need just a little more juice to lock a couple big ones!! Come on bonds!"