Bonds had already begun the process of rallying in response to geopolitical risk yesterday afternoon.  Notably, the headlines hit after the 3pm CME close (which marks the end of the day for a decent chunk of bond market participation).  As subsequent trading sessions began (Asia, Europe, and ultimately, the US again), we witnessed a series of "rolling reactions" to yesterday's headlines.  

In other words, each respective market hub (Asia, Europe, US) had to wait its turn before the full breadth of its trading participation could have its effect on bonds.  Those effects were consistently positive, even if the outright gains weren't staggering.  

The final straw was the 8:20am CME open in the US that took yields down to floors they'd rather not break--namely 2.21%+.  Officially, 10yr yields hit 2.212%, slightly lower than the 2.218% seen on August 3rd, but not low enough to suggest a technical breakout by any means.  The fact that we progressively lost ground for the rest of the day is further evidence of technical resistance.  

As seen several times recently, the close of European trading marked a shift for US bond markets.  This time it was from "barely weaker" to "noticeably weaker."  The 10yr Treasury auction flopped shortly thereafter--only adding to the selling momentum.  That cloud had a silver lining, however, in that yields did seem to find some support at the intermediate technical zone around 2.25%.  

Bigger picture, we're still looking for a break below 2.21% to get excited, and we're still waiting on Friday's CPI for near-term guidance.


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
103-09 : +0-02
Treasuries
10 YR
2.2494 : -0.0326
Pricing as of 8/9/17 6:09PMEST

Today's Reprice Alerts and Updates
A recap of Alerts and Updates provided to MBS Live subscribers.
1:07PM  :  ALERT ISSUED: Weaker 10yr Auction Not Helping
1:00PM  :  10yr Auction Preview
12:24PM  :  ALERT ISSUED: Negative Reprice Risk Increasing for Some Lenders
8:58AM  :  Bonds Blasted by Buyers at CME Open

MBS Live Chat Highlights
A recap of featured comments from the Live Discussion on the MBS Live Dashboard.
Matthew Graham  :  "RTRS - EVANS SAYS 'REASONABLE' TO EXPECT INFLATION TO REACH 2 PCT OVER NEXT FEW YEARS"
Matthew Graham  :  "RTRS - EVANS SAYS WILL TAKE 3-4 YEARS TO UNWIND FED BALANCE SHEET"
Matthew Graham  :  "RTRS - EVANS SAYS WANTS MORE EVIDENCE THAT U.S. INFLATION IS GETTING TO 2 PCT SOONER THAN LATER"
Matthew Graham  :  "RTRS - EVANS SAYS FED SHOULD BE 'VERY CAREFUL' IN ASSESSING FUTURE RATE HIKES"
Matthew Graham  :  "RTRS - EVANS SAYS DECEMBER FED RATE HIKE POSSIBLE, DEPENDS ON INFLATION"
Matthew Graham  :  "RTRS - FED'S EVANS SAYS QUITE REASONABLE TO BEGIN REDUCING BALANCE SHEET IN SEPTEMBER"