The first day of a new month always holds opportunities and risks for rates.  Investors who were compelled to hold certain positions through yesterday are suddenly more free to move about the cabin.  In today's case, most of them jumped out of that cabin!  

There were some moments of reasonably flat trading earlier this morning, but as soon as the NYSE opened at 9:30am, it was essentially a sell-a-thon for the rest of the day.  In part, this speaks to the increased prevalence of bond-related ETF trading in recent years. Specifically, it suggests heavy selling of those ETFs by money managers, speculators, and hedge funds.

For a more general idea of why things are so bad, here's  a useful paragraph from the daily Ratewatch article on

What's up with all the recent drama in rates? Nothing new really... Investors are concerned about increased bond market supply (higher supply = lower bond prices = higher rates) due to fiscal spending initiatives. Because that spending may have a stimulative effect on the economy, investors are also concerned about rising growth and inflation, either of which are bad for rates. OTHER investors are worried about the first group of investors and thus are making trades to try to get ahead of them. This also pushes rates higher. Additionally, global monetary policy seems like it may be on the verge of a unified tightening, much like there was unified loosening in 2008-2015. A removal of policy accommodation means big central banks are buying fewer bonds. Lower demand for bonds = lower prices = higher rates. Finally, some traders are simply reacting to the momentum--selling bonds when rates rise above a certain threshold intraday (again, selling = higher rates), thus creating a snowball effect that pushes rates higher.

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
100-19 : -0-13
10 YR
2.7821 : +0.0621
Pricing as of 2/1/18 5:07PMEST

Today's Reprice Alerts and Updates
A recap of Alerts and Updates provided to MBS Live subscribers.
3:21PM  :  ALERT ISSUED: Negative Reprices Now Highly Likely
2:12PM  :  ALERT ISSUED: Negative Reprices Now Becoming Likely
1:05PM  :  ALERT ISSUED: Negative Reprice Risk Increasing
11:58AM  :  ALERT ISSUED: Bonds at Weakest Levels; Modest Reprice Risk
9:04AM  :  Morning Data a Non-Event; Bonds in "New Month" Trading Mode

MBS Live Chat Highlights
A recap of featured comments from the Live Discussion on the MBS Live Dashboard.
Dominick Cordone  :  "lets just call it bad. Not good is far too positive"
Matthew Graham  :  "Certainly suggestive of "new month" trading positions being put on. Not good."
Matthew Graham  :  "There is no single, convenient "why." This is a very linear and gradual move"
William Hansen  :  "MG why the big drop?"
William Hansen  :  "so much for the saving with all the tax cuts. Oil going up, rates going up, rents going up basically everything. going in one hand and out the other."
Sung Kim  :  "It’s about time. I was so busy before"
Sung Kim  :  "I think higher rates are good for us"
jamie Fitz-Gerald  :  "its high interest rates with a side of inflation"
Ted Rood  :  "I was considering offering Dairy Queen Blizzard coupons with every closing, but not sure what February's flavor of the month is yet"
Caroline Roy  :  "yes, margins dropping for sure."
Mike Drews  :  "this market is getting cut throat...I have seen some of the craziest LO tactics this week"