Yes, I'm going to call a 13bp gain in 10yr yields an insane rally, because who would have logically conceived of such a thing in the current market?  Sure, it wouldn't have been hard to imagine 6, 7, or 8bps of a bond market surge in response to some significant event, but 13bps is the biggest intraday move since Brexit, and beyond that one of 5 biggest moves in the past 7 years.

How did it happen?  

Both stocks and bonds were pushing their technical boundaries in terms of being overbought and oversold respectively.  The shine had already begun to come off the stock rally as of last week, but so much that it had a spillover effect for bonds.  In fact bond yields continued to spike on Friday even as stocks swooned.  Chalk that up to pent-up "new month" tradeflow momentum that was waiting for NFP.

Bond traders got their fill of selling early in Friday's session and held steady for the rest of the day.  The steadiness was deceiving though.  Trading remained active as "new month" trades continued to push toward higher yields while the stock sell-off created some safe-haven demand for bonds that pushed yields in the other direction.  The result was a stalemate.

Today saw much better stock/bond correlation.  With no more new-month trading (or much less, anyway), bonds were more impressionable.  Stocks, of course, experienced massive losses.  In percentage terms, it wasn't even in the top 100 worst days, but in outright terms, the Dow lost the most points on record.  No matter how you slice it, Friday and today have been two of the worst back-to-back days for stocks in recent memory.  Even if you're not too worried about that given the recently stellar levels, it still creates a ton of safe-haven demand for other asset classes.  Bonds are one of the options and they definitely benefited from the scramble.

Safe-haven demand aside, speculators decreased bets on a Fed rate hike at the next meeting and for the overall number of hikes in 2018.  The delta wasn't huge on that, but it was enough to create some organic demand for bonds (independent of the safe-haven cash fleeing stocks).  The most interesting part of today's movement will be tomorrow and the remainder of the week.  It's either going to end up being a very intense day of volatility, or the potential start of a turning point for bonds.  Time will tell.

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
100-29 : +0-21
10 YR
2.7093 : -0.1427
Pricing as of 2/5/18 5:38PMEST

Today's Reprice Alerts and Updates
A recap of Alerts and Updates provided to MBS Live subscribers.
3:10PM  :  Now It's a Momentum Move--Big Snowball Rally For Bonds
1:21PM  :  Back in Positive Territory After Draghi Comments
10:03AM  :  ALERT ISSUED: ISM Data Hurting Bonds; Negative Reprice Potential Increasing

MBS Live Chat Highlights
A recap of featured comments from the Live Discussion on the MBS Live Dashboard.
Andrew Russell  :  "chaos theory"
Scott Valins  :  "can't apply any theory to this"
Scott Valins  :  "it's 5 min of trading Tassios"
John Tassios  :  "nope. I still say this is dominoe effect of falling USD due to irresponsible budget and spending of our elected officials. Ladies and Gentlemen - budgets, runaway deficits now matter again and has come home to roost."
Matthew Graham  :  "2.79+ Then 2.75"
Dmitriy S  :  "Matt, what's the next pivot point? 2.76?"
Manny Gomes  :  "I have not seen that many reprice for the better notification in a very long time"
Sung Kim  :  "stocks for sure are VIX hedging, the 2nd most crowded trade on the street"
Matthew Graham  :  "Looks like some potential safe haven cash from equities liquidations too"