Today could be viewed at least 2 ways if you're a fan of low rates.  On one hand, you might despair to see that rates are continuing higher after bouncing at the lows of the year last Friday.  On the other hand, you might take some heart in the fact that today's selling was less severe than yesterday's.  Neither approach is necessarily wrong.  

In today's video (for MBS Live members), I discussed in greater detail why we could easily see a bit more selling in the coming days.  Whether or not that selling is already in the process of slowing down remains to be seen.  

As for today's motivation, it's interesting and complex.  Bonds could justify more weakness simply because this is a "correction" the the recent rally, but they received an additional push from a big glut of corporate bond issuance--not to mention the scheduled Treasury issuance over the first 3 days of the week.  

10yr yields tested (and broke, sorta...) above 2.16%--a key technical level in recent weeks.  Holding above tomorrow would imply a showdown with 2.22%.  MBS have taken less damage than Treasuries, with Fannie 3.5 coupons down only 2/32nds as we approach the final trades (it looks like more on charts due to "the roll"--the change over from September to October coupons, where the latter were always trading at slightly lower prices).


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
103-11 : -0-02
Treasuries
10 YR
2.1672 : +0.0422
Pricing as of 9/12/17 4:41PMEST

Today's Reprice Alerts and Updates
A recap of Alerts and Updates provided to MBS Live subscribers.
1:16PM  :  10yr Auction Hurt at First, But Possible Bounce
11:31AM  :  ALERT ISSUED: Only a Few Lenders May Be Considering Negative Reprices
9:22AM  :  ALERT ISSUED: Bonds Under Additional Pressure After Mnuchin Comments

MBS Live Chat Highlights
A recap of featured comments from the Live Discussion on the MBS Live Dashboard.
Mike Christensen  :  "Glass was overflowing the last few weeks...........It is still half full and the glass will fill up again. Just a breather......Patience"
Matthew Graham  :  "trouble is relative. Bigger picture, no stress. Shorter timeframe, sure... we could remain under pressure until next week's Fed, and even test levels in the mid-to-upper 2.2's."
jamie Fitz-Gerald  :  "MG, you think we are in trouble being above 2.16?"
Matthew Graham  :  "Better than yesterday's 3yr auction"
Matthew Graham  :  "ugly when not graded on the curve"
Victor Burek  :  "i would think with sell off prior, it woudl ahve been stronger"
Matthew Graham  :  "actually, B-, C+"
Victor Burek  :  "ugly?"
Matthew Graham  :  "RTRS - PRIMARY DEALERS TAKE 38.67 PCT OF U.S. 9-YEAR 11-MONTH NOTES SALE, DIRECT 6.05 PCT AND INDIRECT 55.28 PCT"
Matthew Graham  :  "RTRS - U.S. 9-YR 11-MO NOTES BID-TO-COVER RATIO 2.28, NON-COMP BIDS $10.16 MLN"
Matthew Graham  :  "RTRS - U.S. SELLS $20 BLN 9-YR 11-MO NOTES AT HIGH YIELD 2.180 PCT, AWARDS 97.85 PCT OF BIDS AT HIGH"