If there were a magical ratio comparing the overall movement in bond markets to the relevance of the factors motivating the movement, it would be off the charts with today's rally.  A 4.72bp improvement in 10yr yields is nothing to shake a stick at--especially when it resulted in the best closing levels in nearly 2 months.  But this particular rally is utterly lacking in a few key ingredients we normally like to see when bonds are green.

First and foremost, there's just not any volume or liquidity to speak of at the moment.  That's not altogether uncommon for this time of year, but it stands out a bit more when it's the caveat to an otherwise "nice" move.  Before we go any deeper into that rabbit hole let's cut it short with an example to drive home the point.  

Imagine that bond traders made bets on rates moving higher last week and then got out of the market this week.  "Getting out of" a "bet on rates moving higher" = buying bonds.  I'm not saying that's the only driving force behind today's rally, but in illiquid markets, it wouldn't take very much of this short-covering to give the illusion of a healthy rally.  And still, it would merely mean traders had moved to the sidelines ahead of Jackson Hole. 

Bottom line, there's a distinct apathy underlying today's solid gains.  I'm not even sure if the Jackson Hole symposium over the next 2 days is what bond markets are looking for, but it's our best shot at underlying events moving bonds this week, as opposed to the random walk seen over the past 3 days.

MBS Pricing Snapshot
Pricing shown below is delayed, please note the timestamp at the bottom. Real time pricing is available via MBS Live.
FNMA 3.5
103-13 : +0-06
10 YR
2.1694 : -0.0456
Pricing as of 8/23/17 5:26PMEST

Today's Reprice Alerts and Updates
A recap of Alerts and Updates provided to MBS Live subscribers.
9:04AM  :  US Bonds Follow Europe on Brexit Headlines

MBS Live Chat Highlights
A recap of featured comments from the Live Discussion on the MBS Live Dashboard.
Dan Clifton  :  "high peep, where can I find what the average interest rate was for a specific month in the past? I am trying find rate for july 2007. I tried looking at the APOR in my system but it only goes back to 2009"
Matthew Graham  :  "Curt, keep in mind that it's just new construction and that this particular report is subject to a very wide margin of error, fairly consistently."
Sung Kim  :  "be careful what you ask for re: inventory as it relates to home values"
Eric Sayer  :  "Need more "good" inventory..."
Dan Draitser  :  "Same story in socal. Need more inventory"
Gavin Luckman  :  "Curt, I'm seeing it take at least 3-6 months for my clients to get an accepted offer. It's crazy out there right now. It seems as though there isn't enough inventory but there are more and more "For Sale" signs popping up everywhere around me (Long Island, NY)"
Curt Sandfort  :  "lots of news today about bad numbers on "new home sales", are we seeing that on the streets, or did the bean counters forget to include a few key metrics out there?"