For some of you, this may seem very basic.  For others, hopefully it will serve as an eye-opener or even just a useful refresher.  I got the inspiration to write this after seeing two different news articles on bonds.  They both made the same underlying point but used completely different words: "higher" and "lower."

From a bond market participant's point of view, when bonds are "stronger," they're moving higher in price and lower in yield.  When they're weaker, the opposite is true.  This is just about the only thing you should take for granted when digesting bond market news here and elsewhere.  Even then, this requires knowing that you're in the presence of bond-market-focused journalists (safe bet here).

Things get trickier as we explore other combinations of sources and verbiage.  In fact, even among bond people, "higher" and "lower" aren't always used the same way.  The more institutional the source (i.e. analysts at big name firms writing for institutional investors), the more likely they are to use "higher" to refer to PRICES.  Thus "higher" = "stronger" = "lower yields."  Frustratingly enough, many of those institutional sources will also lapse and use those words in the opposite way to refer to yields.  I personally think it's much more intuitive to simply talk about rates/yields moving higher or lower, but in any case, I attempt to always specify whether I'm talking about yields/rates vs PRICE.

If you're reading an article from a mainstream news outlet--especially if the author isn't a dedicated bond person--chances increase exponentially that "strength," "improvement," and "gains" may be used to refer to bond YIELDS moving higher.  They're thinking about bond yields in terms of an investment that's going to pay better over time.  This is commonly seen in stock-focused articles comparing stock returns to bond yields.

In any event, unless the author specifically states the direction of prices and yields, you may need to use some context clues to make sure you know exactly what they're saying.  When in doubt, feel free to ask the MBS Live community in the live chat channel.

Moving on to today's data and events, the bigger-ticket reports both hit at 10am with Consumer Confidence and New Home Sales.  These aren't typically huge market movers, but they're the best we have today, apart from fiscal developments, geopolitical headlines, or something similarly 'unscheduled.'  The 2yr Treasury auction kicks off this week's auction supply, but the 5 and 7yr auction in the coming days are much more relevant for the rates we're concerned with (2 and 3yr auction rarely move 10yr yields and MBS). 

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
103-10 : -0-02
10 YR
2.2357 : +0.0157
Pricing as of 9/26/17 9:03AMEST

Tomorrow's Economic Calendar
Time Event Period Forecast Prior
Tuesday, Sep 26
9:00 CaseShiller 20 mm nsa (%) Jul 0.7 0.7
10:00 Consumer confidence * Sep 120.0 122.9
10:00 New home sales-units mm (ml)* Aug 0.588 0.571
10:00 New home sales chg mm (%)* Aug 3.3 -9.4
13:00 2-Yr Note Auction (bl) 26