10yr yields hit the highest levels in more than 4 years this afternoon as bigger-picture selling pressure looks to be taking the reigns back from the Springtime consolidation that helped rates hold steady-to-slightly lower in March. 

There are no big, obvious reasons for the sudden spike in rates. We're left to cobble together a narrative from boring, esoteric stuff like an "imbalance in trading positions," anxiety over the data, earnings, and bond supply next week, and the end of a few days of extra help from tax deadline retirement account funding.

Or, if you'd like to go with fewer words, it's no less valid to say that technicals and momentum are the culprits.

In other words, bonds were in a consolidation trend. They tested the ceiling, broke the ceiling, and have been selling aggressively since then. That selling begets more selling as it forces anyone holding long positions to liquidate (i.e. they have to sell bonds as their stop-loss levels are hit, and their selling pushes yields that much higher, potentially above other traders' stop-loss levels).

Long story short, if the longer-term selling trend is bonds' big bad wolf, he'd been knocking over the past few days with today bringing that telltale huffing and puffing. We'll see what our house is made of next week.


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
99-04 : -0-10
Treasuries
10 YR
2.9602 : +0.0462
Pricing as of 4/20/18 5:13PMEST

Today's Reprice Alerts and Updates
A recap of Alerts and Updates provided to MBS Live subscribers.
3:33PM  :  ALERT ISSUED: 10yr Officially Hits 4-Year High; More Reprice Risk
12:58PM  :  ALERT ISSUED: Negative Reprice Risk Increasing
9:41AM  :  ALERT ISSUED: Negative Reprice Risk Shows Up Early

MBS Live Chat Highlights
A recap of featured comments from the Live Discussion on the MBS Live Dashboard.
McKay Platt  :  "It's the third day and I would like to rescind this market"
Hugh W. Page  :  "Next recession might be closer than you think. We're long overdue, consumers are better off now but still extremely vulnerable to any negative shocks making them cautious. Higher oil prices may start eating into any tax cut benefits for middle to lower income folks. As we get north of 3% some money will naturally flow to Treasuries rather than equities and if we get a strong selloff in equities stock lever may just kick in big time for us."
Brent Borcherding  :  "There is still MBS and Treasury reinvestment. Those reinvestment numbers are dwindling on a monthly basis, though."
Edgar  :  "BB - A majority of investors still claim this market is "artificially" low despite the Fed not buying bonds for years and the fed raising rates 6 times. At some point people will realize that you can't have an "artificially" low market with no bond buying and a fed raising rates that everyone is anticipating they will do....it's simply just the "real" market that happens to have a historically low yield."
Edgar  :  "You might be right BB; the days of a 10 year yield above 4.00% are over; not going to happen."
Brent Borcherding  :  "Yes, I believe that ultimately is near the true ceiling, but we test higher for a short period."
Edgar  :  "3.25%?"
Brent Borcherding  :  "I'll go ahead and set the ceiling a bit higher, Edgar, but not by a ton."
Edgar  :  "Sub 3.00% long term on the 10y is the new normal; market just doesn't know it."
Matthew Graham  :  "I think it means that if he had to guess where rates should/would be based on all the other "stuff" going on in markets/economy/politics, that he would guess higher. Put another way, he's also probably saying that the long-term growth/inflation outlook remains stubborn, OR that investor demand for bonds remains surprisingly strong despite obvious headwinds."
Ted Rood  :  "Thanks, Neel. Why don't you just say you're shocked treasuries aren't yielding 4% while you're at it?"
Andy Pada, Jr.  :  "what does that mean?"
Matthew Graham  :  "RTRS - FED'S NEEL KASHKARI SAYS SURPRISED TREASURY YIELDS HAVEN'T GONE HIGHER - CNBC"