The titular question could be taken two ways. Is the selling pressure in bonds over? Is the "low rate environment" that's been in effect since mid-2011 over?  The answers, in order are "probably not" and "for now."

To be fair to the "low rate environment," that's arguably been over since 10yr yields broke above 2.5% in a serious and sustained way.  They've only done that one other time since moving below and that was the 6-7 months following the taper tantrum.

I've frequently suggested that mid-2012 was the truest confluence of low rate motivations and that mid-2016's drop in rates was more of a pain trade for everyone betting on higher rates (Brexit was the scapegoat).  If you look past the taper tantrum and the brexit rally, we've seen rates trend higher in a fairly linear way since mid-2012.  All that to say, it's actually been "over" since 2012 if we're looking for another run at all-time low rates in the short term.

As to whether or not the current selling spree is over, it would really help to know exactly why the selling spree exists in the first place.  Obviously, we can go back to early 2018 discussions and point out that we were talking about rates in the mid 3% range by the end of the year due to various headwinds that wouldn't soon be overcome.  We could also revisit my lamentations of the financial media hullabaloo surrounding the Springtime break above 3% 10yr yields (my point was that 10yr yields should obviously be higher than 3% based on an apples to apples comparison with 2013/14's run to 3.04%).

But any reliance on past analysis is a bit of a cop-out when it comes to answering the question "why now?  why this week?"  The past analysis helps us reconcile why rates should generally be as high as they are, but we really don't have anything concrete for why this week has seen so much of the selling.  If you missed it, I discussed all this in much more detail in today's Huddle.  It's worth 7 minutes of your time if you're trying to wrap your mind around the cause&effect behind recent volatility.


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 4.0
100-26 : -0-01
Treasuries
10 YR
3.0663 : +0.0183
Pricing as of 9/19/18 4:35PMEST

Today's Reprice Alerts and Updates
A recap of Alerts and Updates provided to MBS Live subscribers.
10:59AM  :  ALERT ISSUED: Negative Reprices Becoming More Likely
9:53AM  :  ALERT ISSUED: Negative Reprice Risk After NYSE Open and Draghi Comments

MBS Live Chat Highlights
A recap of featured comments from the Live Discussion on the MBS Live Dashboard.
Matthew Graham  :  "For those that didn't infer the answer: there is no specific driver. At that point, we might start talking about things like seller exhaustion or the shift in supply/demand balance associated with the European close. We could even talk about oversold momentum, but using any of that as a justification is entirely dependent on hindsight, and therefore, worthless. That's why it's most accurate and fair to say "nothing is driving this rebound.""
Mike Christensen  :  "Hmm..... Can you elaborate?"
Matthew Graham  :  "traders buying more bonds than they're selling"
Mike Christensen  :  "What is driving the small rebound MG?"
Timothy Baron  :  "Wait, do you mean rates don't stay exactly the same while a buyer is shopping?"
Adam Dahill  :  "Getting all those calls today... Do you think rates will get better tomorrow? YES NO MAYBE???"
Vince Boryla  :  "refi boom in 2020"
Dan Draitser  :  "Wow; that quote from last Thursday looks foreign now"
Timothy Baron  :  "Those 1 month charts are not pretty."

Economic Calendar
Time Event Period Actual Forecast Prior
Wednesday, Sep 19
7:00 MBA Purchase Index w/e 234.2 233.5
7:00 Mortgage Refinance Index w/e 917.1 884.3
8:30 Building permits: number (ml)* Aug 1.229 1.310 1.303
8:30 Housing starts number mm (ml)* Aug 1.282 1.235 1.168
8:30 House starts mm: change (%) Aug 9.2 0.9
8:30 Build permits: change mm (%)* Aug -5.7 0.9
Thursday, Sep 20
8:30 Philly Fed Business Index * Sep 17.0 11.9
8:30 Jobless Claims (k) w/e 210 204
10:00 Existing home sales (ml)* Aug 5.35 5.34