Treasury yields hit their highest levels in exactly 3 weeks today with little apparent motivation.  Indeed, volumes remained lower than recent averages and movement arrived in line with opening and closing bells for various markets (9:30am NYSE open and 3pm CME close).  This suggests a general lack of fundamental motivation for the weakness, relegating it to the status of "correction" (i.e. bonds are just going through the motions).

We'd been on the lookout for a correction for a few weeks, given that bonds had been trending toward lower yields in a calm, linear fashion for the better part of 2 months.  This week provided a good opportunity for that correction, and now the only question is how long it lasts.  How high will traders need to push rates before the dominoes are reset?

10yr yields hit the 3pm close roughly 3bps higher at 2.195% and Fannie 3.5 MBS were only 3/32nds lower at the same time.  In other words, it was yet another day where MBS outperformed Treasuries.  While that's not uncommon during sell-offs, it's still nice to see during this one.  In fact, today's rates were slightly lower than yesterday's for most lenders.  That's a timing issue, for the most part, and we'd expect rates to move back up tomorrow morning unless bonds improve overnight or after the 8:30am CPI data.


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 : -0-03
Treasuries
10 YR
2.1953 : +0.0243
Pricing as of 9/13/17 4:15PMEST

Today's Reprice Alerts and Updates
A recap of Alerts and Updates provided to MBS Live subscribers.
2:57PM  :  ALERT ISSUED: Negative Reprice Risk Increasing
1:22PM  :  Bonds Holding Ground After Mediocre 30yr Auction
10:03AM  :  ALERT ISSUED: Weakness and Volatility Following NYSE Open
9:32AM  :  Snooze-Fest So Far. No Objections

MBS Live Chat Highlights
A recap of featured comments from the Live Discussion on the MBS Live Dashboard.
Sung Kim  :  "well - it's clearly because of this shot in the dark headline - Inflation data could give traders a surprise Thursday, analyst says"
Matthew Graham  :  "Another C+"
Matthew Graham  :  "RTRS - U.S. 29-YEAR 11-MONTH BOND BID-TO-COVER RATIO 2.21, NON-COMP BIDS $4.21 MLN"
Matthew Graham  :  "RTRS - U.S. SELLS $12 BLN 29-YEAR 11-MONTH BONDS AT HIGH YIELD 2.790 PCT, AWARDS 20.40 PCT OF BIDS AT HIGH"
Matthew Graham  :  "Treasury auction preview: Expected yield is trading around 2.787. Average bid to cover 2.31 recently. Indirects have been just over 60%. To decode this jargon, here's the primer: Treasury Auction Jargon, Definition, and Significance "
Ray Blindauer  :  "On a recent transaction a Realtor told me she's never had a closing be late. I told her she doesn't sell enough real estate."