Well... at least things are interesting.  The winter holidays are always a challenge from an analytical and market-watching standpoint.  It seems like a vast oversimplification (indeed, I didn't believe it was true when someone tried to educate me years ago), but "new year momentum" can really be the primary motivation for bond markets.  And it really can be something we just have to wait for until the 2nd week of January.  

In the case of 2018, the 2nd week of January suggested the New Year momentum was toward higher rates.  As we wrap up the 3rd week of of January, that continues to be the case.  It's really that simple.  There's no need to dissect causality on smaller scales.

But if you want smaller scale causality, we can talk about a fairly massive amount of corporate debt issuance this January.  Today was especially big and active.  (Read our primer on how corporate issuance affects rates HERE).  

Economic data was fairly mixed and generally a non-issue for bond markets.  If anything, the inflation component of the Philly Fed Index made for a bit of additional weakness at 8:30am.  Inflation is a key consideration at the moment, to be sure, but big intraday reactions seem to be reserved mainly for the monthly release of the CPI data.  Even this afternoon's stellar demand for 10yr Treasury Inflation-Protected Securities didn't rock the boat.

From a technical standpoint, the ceiling we were watching at 2.60% was broken today.  We're now actively testing the 2.62-2.64 zone seen in late 2016 and again in March 2017.  Bond buyers are interested in buying some time soon, but no one wants to be the first prairie dog to stick their head up at a time like this.


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
101-17 : -0-06
Treasuries
10 YR
2.6256 : +0.0476
Pricing as of 1/18/18 4:47PMEST

Today's Reprice Alerts and Updates
A recap of Alerts and Updates provided to MBS Live subscribers.
3:29PM  :  ALERT ISSUED: Negative Reprice Risk Could Increase Unless Bonds Turn Around Now
8:47AM  :  ALERT ISSUED: Weaker After Econ Data

MBS Live Chat Highlights
A recap of featured comments from the Live Discussion on the MBS Live Dashboard.
Matthew Graham  :  "more like 10-20, but the question is what will they add up to relative to the red days that we'll also get."
Matthew Graham  :  "we'll have one or two before then I'd wager"
Dan Draitser  :  "Is the only green we'll be seeing in the future on st paddys day?"
Matthew Graham  :  "Hopefully we don't have to look to closely at that any time soon, but longer-term, a flat range from 1-3% makes sense to my mind."
Matthew Graham  :  "That would certainly be a viable way to look at it."
Peter Lassig II  :  "Hi MG: Given that the 10yr and rates were higher at the beginning of 2014 (pretty much on the exact day I locked on our home purchase : ), couldn't we truly say it appears to be over only after we break substantially and consistently higher than 3?"