With elevated stock/bond correlation of late, it's always worth noting when things move in the opposite direction.  Today was such a day, with stocks making solid gains while bonds managed to hold their ground near unchanged levels.  Corporate bond issuance and stronger economic data also added to ostensible challenges for rates, thus making the ground-holding all the more interesting.  

But here are the caveats:

1. Not every part of the bond market held its ground.  Shorter maturity bonds (like 2yr Treasuries) lost ground.  This pushed the yield curve to its narrowest levels since 2007.  This is a reflection of the positive economic data having clear implications for the Fed's rate hike path (which would affect 2yr yields) but fewer implications for longer-term growth and inflation (which would affect 10yr yields).

2. We could still be seeing temporary distortions surrounding retirement account funding ahead of today's tax deadline.  In other words, money managers have been buying more bonds than they typically would given the other variables in play.

The implicit risk here is that when the curve trading corrects (something it periodically does on its way lower) and when the temporary distortions are behind us, longer-term bonds (and mortgage rates) could be looking at a bit more pressure than they're currently prepared for.


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
99-26 : -0-02
Treasuries
10 YR
2.8304 : -0.0016
Pricing as of 4/17/18 4:45PMEST

Today's Reprice Alerts and Updates
A recap of Alerts and Updates provided to MBS Live subscribers.
10:58AM  :  Bonds Testing Best Levels as Curve Collapses

MBS Live Chat Highlights
A recap of featured comments from the Live Discussion on the MBS Live Dashboard.
Hugh W. Page  :  "MG will have the best answer I'm sure but as I understand it it's the rate at which the Fed feels they no longer need to be either stimulative or tightening in their monetary policy."
aaron meyer  :  "Define neutral setting"
Matthew Graham  :  "RTRS - EVANS SEES LITTLE RISK OF ACCELERATING, MARKEDLY HIGHER INFLATION"
Matthew Graham  :  "RTRS - EVANS SAYS U.S. INFLATION SOMEWHAT BELOW TARGET, EXPECTED TO IMPROVE"
Matthew Graham  :  "RTRS - EVANS SAYS FED FUNDS RATE DOES NOT NEED TO RISE MUCH ABOVE NEUTRAL SETTING"

Economic Calendar
Time Event Period Actual Forecast Prior
Tuesday, Apr 17
8:30 House starts mm: change (%) Mar +1.9 -7.0
8:30 Building permits: number (ml)* Mar 1.354 1.323 1.321
8:30 Housing starts number mm (ml)* Mar 1.319 1.262 1.236
8:30 Build permits: change mm (%)* Mar +2.5 -4.1
9:15 Capacity Utilization (%) Mar 78.0 77.9 77.7
9:15 Industrial Production (%) Mar +0.5 0.4 0.9
Wednesday, Apr 18
7:00 Mortgage Market Index w/e 380.6