I'm not shy about dismissing the conventional wisdom of bond yields and stock prices following each other.  We're talking about some iteration of the quintessential quip: "buy stocks, sell bonds," or vice versa.  Over the shorter time horizons, we do indeed see that sort of relationship play out from time to time, but the opposite has been true for the last 40 years as both stocks and bonds have rallied together.  

The lock-step movement is most prevalent during times of very light liquidity around holidays or at the end of Summer.  Today was a classic example of bonds being left with nothing better to follow after European markets closed.  Europe had been helping us hold ground through the noon hour.  After Europe closed, the biggest show in town was the stock market rally.  

Taking cues from stocks meant bonds drifted toward higher yields in the afternoon.  A silver lining is that Treasuries are first in line to take stock market cues whereas MBS are another degree removed from most primary sources of motivation.  As such, MBS losses were lighter than Treasuries.  Fannie 3.5 coupons lost an eighth of a point or less depending on when you mark the end of the day.  Through the 3pm CME close for Treasuries, 10yr yields were up roughly 3bps--more than a quarter of a point in terms of price movement.


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
103-07 : -0-03
Treasuries
10 YR
2.2166 : +0.0366
Pricing as of 8/22/17 4:23PMEST

Today's Reprice Alerts and Updates
A recap of Alerts and Updates provided to MBS Live subscribers.
1:41PM  :  ALERT ISSUED: Negative Reprice Risk Considerations: Not Black and White
9:02AM  :  Bonds Open Weaker. They Won't Tell You Why

MBS Live Chat Highlights
A recap of featured comments from the Live Discussion on the MBS Live Dashboard.
Andy Pada, Jr.  :  "maybe if you add servicing of a .25 you could possible get par note rate."
Andy Pada, Jr.  :  "there is a connection but par yield does not equal par note rate"
Andy Pada, Jr.  :  "yield is not note rate"