First off, let me say that the extent to which bond market weakness over the past 2 days is being wholly attributed to the tax plan borders on ridiculous.  There's something else going on here (several "somethings"), and I expect we'll find out more about those factors fairly soon.  

Why so ridiculous?

Simply put, people who are giving the tax plan any meaningful credit as a market mover are failing to appreciate just how far away we are from actual legislation.  Looked at another way, the sooner tax legislation happens, the less it would look anything like the plan being suggested.  Bottom line, we have bullets points, goals, and a few remarks from Congresspeople saying they're interested in getting things done.  Big deal!

Is this resignation and indignance my way of whining about bond market weakness?  Not at all!  Strength and weakness will happen, always and forever.  Rather, I'm indignant about the bandwagon effect that the tax plan seems to have rapidly engendered.  Where's the huge move in stocks?  Why have bonds continued to higher yields this morning even as stocks and $/Yen have moved lower?  

I'm guessing that we'll be talking next week about a tradeflow/position story in bonds that I alluded to yesterday, and maybe we'll be sprinkling in a bit of month-end trading consideration.  Specifically, I wonder if bond buyers were a bit too eager to step in and "buy the dip" in prices that took place during the most recent sell-off.  Perhaps they were also caught off guard by a shorter-than-expected month-end index extension (click the month-end trading link above if that last sentence doesn't make sense).  

More than anything though, I'm really interested in the fractal pattern that CONTINUES playing out in 2017 compared to 2014.  I've mentioned this several times in the past several months, but always as a mere curiosity.  This most recent move takes things from coincidental to downright uncanny--depending on your point of view.  From my point of view, there are too many similarities here to ignore (and there are plenty that aren't even listed on the chart below).

2017-9-28 open

So does this mean bonds will keep following 2014's cues and embark on an awesome rally?  Sadly, no.  Or rather, "not necessarily."  I bring up the fractal relationship to prove a point about market movement not necessarily needing to have a tidy and convenient explanation in run-of-the-mill headline news.  The more similarity we see between two eras following a massive selling spree (taper tantrum and post-election), the more we can say that the natural ebbs and flows in trading positions are playing a major part.  From here on out, we'd need something like we had in 2014 (ECB QE inception) to guarantee a similar rally.  

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
103-02 : -0-02
10 YR
2.3335 : +0.0245
Pricing as of 9/28/17 8:31AMEST

Tomorrow's Economic Calendar
Time Event Period Forecast Prior
Thursday, Sep 28
8:30 GDP Final (%) Q2 3.0 3
8:30 Jobless Claims (k) w/e 270 259
13:00 7-Yr Note Auction (bl)* 28