The recent rate drama continues unabated.  Today was the 6th day of heavy selling in bond markets, bringing yields within striking distance of the 2014 highs near 3.041%.  As has been the case during this sell-off, there really hasn't been much to hang one's hat on with respect to convenient explanations.  It's not as if there was some big revelation from a major central bank or some hugely positive piece of economic data.

Rather, I continue to see this as a simple resumption of the previous bigger-picture trend toward higher rates, with the same old broad headwinds accepting blame (Fed outlook, Treasury issuance outlook, growth/inflation risks).  This past week was compounded not only by a technical break of March's corrective trend, but also by distorted tradeflows associated with the tax deadline (retirement account funding making its way to managed funds that include bonds).

Essentially all of today's weakness was intact by the time the domestic session began.  There was a brief, modest attempt to rally early, then bonds slowly drifted back toward their weaker levels.  While this didn't result in any serious reprice risk, the weaker levels in the morning made for some rate sheet ugliness.  We should expect to see a token bounce within the next 3 business days, but there's no guarantee such a thing would last more than a single day at this point.  Even then, lenders aren't likely to pass much (if any) love on to rate sheets for a single day of gains.


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
98-23 : -0-05
Treasuries
10 YR
3.0315 : +0.0485
Pricing as of 4/25/18 4:32PMEST

Today's Reprice Alerts and Updates
A recap of Alerts and Updates provided to MBS Live subscribers.
1:18PM  :  No Big Reaction to 5yr Auction
10:10AM  :  Weaker Overnight; Modest Bounce Early; Still Red; Bonus Charts

MBS Live Chat Highlights
A recap of featured comments from the Live Discussion on the MBS Live Dashboard.
Brent Borcherding  :  "Thank you for your consideration."
Sung Kim  :  "i would probably modify that to say there is a very low prob it will happen in 2018"
Curt Sandfort  :  "agreed"
Brent Borcherding  :  "It's not 2018."
Curt Sandfort  :  "#miniboom"
Sung Kim  :  "not a question of IF it's a question of WHEN we hit record low rates"
Sung Kim  :  "this expansion has been fueled by credit"
Sung Kim  :  "seeing growth take off? we are close to the end of the credit cycle"
Matthew Graham  :  "my adjectives aren't usually that forward-looking when it comes to thoughts shared on the live chat. Really 95% focused on intraday reprice risk,since that's the one thing that can actually be predicted with a high degree of accuracy. Therefore, it would have been deeply troubling in terms of its implication for the rest of today."
Brent Borcherding  :  "What's deeply troubling? If rates are on the rise for good reason, meaning we'll finally see growth take off then that's awesome. If growth isn't real, then we'll see new lows and that would be great, too."
Ted Rood  :  ""Deeply troubling" is an apt description of recent events."
Matthew Graham  :  ""B" versus these stats, but anything less would have been deeply troubling considering the recent sell-off"
Matthew Graham  :  "RTRS - PRIMARY DEALERS TAKE 26.16 PCT OF U.S. 5-YEAR NOTES SALE, DIRECT 13.68 PCT AND INDIRECT 60.16 PCT"
Matthew Graham  :  "RTRS - U.S. 5-YEAR NOTES BID-TO-COVER RATIO 2.49, NON-COMP BIDS $54.55 MLN"
Matthew Graham  :  "RTRS - U.S. SELLS $35 BLN 5-YEAR NOTES AT HIGH YIELD 2.837 PCT, AWARDS 56.70 PCT OF BIDS AT HIGH"
Matthew Graham  :  "5yr auction preview: Recent average bid-to-cover has been 2.45x. The average result is 0.004% higher than the 1pm "when-issued" yield, which is currently 2.833. Indirect bidders have taken an average of 62%."
Matthew Graham  :  "To decode the following, use this: Treasury Auction Jargon, Definition, and Significance "