It's tempting to say that bond markets are definitively pushing back against the sharp correction that brought rates higher over the past 2 weeks.  In fact, that's likely the case, but we have to ask ourselves just how open-and-shut this case may be.  

Just like last Friday, bonds benefited from headlines surrounding North Korea.  This time, a North Korean official said the US has declared war and that North Korea has the right to shoot down US warplanes even if they're outside North Korean airspace.  

While this could be viewed as yet another example of overblown rhetoric, markets didn't shrug it off--likely because of the wording.  "Declared war" and "U.S." are hot buttons for trading algorithms, which clearly had a field day with the initial release.  Then traders began to wonder what the US response might be.  

Even after the White House disavowed the claims, bond markets didn't reverse the rally in any major way (though the White House headlines did seem to put an end to the rally).  This took an "unchanged" day for bonds and turned it into a rally of over 3bps for 10yr yields.  MBS don't benefit as readily from geopolitical motivations, but Fannie 3.5s nonetheless gained an eighth of a point.

Yields now face resistance at the 50-day moving average below (2.213%) and hope to hold one of two supportive pivot points overhead (2.24% or 2.28%).


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
103-12 : +0-04
Treasuries
10 YR
2.2216 : -0.0404
Pricing as of 9/25/17 5:15PMEST

Today's Reprice Alerts and Updates
A recap of Alerts and Updates provided to MBS Live subscribers.
10:55AM  :  Bonds Rally on North Korea Headlines
9:47AM  :  Bonds Stabilize After Feeling Some Pressure at CME Open

MBS Live Chat Highlights
A recap of featured comments from the Live Discussion on the MBS Live Dashboard.
Brandon Blue  :  "Awesome video MG. Thank you."
Clayton Sandy  :  "Or just mention to him there are TONS of states that don't even require an attorney to close...."