Everything seemed so simple last Friday when bonds were surging past technical barriers in strong volume--ostensibly ringing the dinner bell for more bond buying.  The fact that everything seemed so simple was also the biggest risk.  Perhaps it was "too simple."  Perhaps the technical conclusions were too obvious.  The weakness so far this week shows us why.

The weakness was easier to brush off as a modest consolidation of last week's strength yesterday.  At that time, none of the losses were so severe as to suggest we question the reversal leading back from the high yields seen in early October.  If that didn't change today, it became a much closer call.  

10yr yields rose more than 4bps and Fannie 3.5 MBS fell a quarter of a point.  The selling transpired with precious little justification in terms of fundamentals (economic data, news headlines, or Fed policy).  There was also precious little volume, or at least lower volume compared to yesterday.  

What we're left with--for now--is a classic little pain trade for bond bulls; a push back against the obvious technical implications of last week's gains.  Until and unless 10yr yields break above key technical ceilings at 2.37% and 2.40%, this is still just a consolidative move, but admittedly a more uncomfortable one than it was 24 hours ago.


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
102-26 : -0-08
Treasuries
10 YR
2.3465 : +0.0485
Pricing as of 10/18/17 4:57PMEST

Today's Reprice Alerts and Updates
A recap of Alerts and Updates provided to MBS Live subscribers.
3:43PM  :  ALERT ISSUED: MBS at Weakest Levels as Gradual Losses Mount
8:41AM  :  Bonds Sharply Weaker Overnight; Survey Says...

MBS Live Chat Highlights
A recap of featured comments from the Live Discussion on the MBS Live Dashboard.
Scott Valins  :  "seas a bit rough though"
Scott Valins  :  "comfortably floating"
Hugh W. Page  :  "idling in the marina"
Ted Rood  :  "two in the harbor, wish they were docked"
Oliver Orlicki  :  "Are your boats docked or at sea?"
Victor Burek  :  "its different this time"
Christopher Stevens  :  "pretty sure that was part of a big problem a few years back"
Hugh W. Page  :  "ruh roh"
Christopher Stevens  :  "Just saw a commercial the other day that said your house is your own personal bank"