As noted in today's MBS Huddle, an absence of any selling pressure in bond markets was a positive result in itself.  Selling pressure would have been fairly easy to justify given the slightly stronger CPI data as well as moderately stronger Retail Sales.  Bonds not only held their ground but did so at the lowest yields of the week.  

Things began to look a little shaky heading into the afternoon, but as soon as European markets closed, bond buyers found themselves in control again.  Treasuries began drifting back toward lower yields (more so in longer-dated bonds) and MBS approached the morning highs, up more than an eighth of a point.

The yield curve (which typically refers to the spread between 2 and 10yr Treasury yields) has certainly been a consideration for traders.  The fact that it broke to another "lowest in a decade" level this morning may well have been the source of the weakness that followed.  We talked about the potential for this sort of corrective weakness as the curve continues heading lower/tighter.  This time around, however, the curve came back for a second helping in the afternoon, and didn't look nearly as eager to bounce as it did when we blamed it for last week's sell-off in bonds.

2017-11-15 close