Bonds began the day in weaker territory this morning, and they didn't need anyone to twist their arm in getting there.  That was our first clue that traders are simply positioned extra defensively ahead of tomorrow's FOMC events (announcement, forecasts, and press conference).

Subsequent clues arrived throughout the day as follows:

1. Consumer Confidence was exceptionally strong, yet produced no visible reaction in bonds.  This suggests traders had priced in their pre-Fed defensive positioning and weren't keen to move far from there.

2. Similar story with the 5yr Treasury auction.  It was weaker than expected, which argues for bond market weakness, yet we're ending the day right in line with morning levels.

As always, keep in mind that tomorrow's volatility isn't necessarily guaranteed, but the potential is higher.  Also, keep in mind that volatility works both ways.  If stronger data and weaker auctions aren't causing traders to rethink how high rates are today, there's a chance the Fed could end up being more bond-friendly than the average trader expects.


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
100-22 : -0-02
Treasuries
10 YR
3.0983 : +0.0203
Pricing as of 9/25/18 4:34PMEST

Today's Reprice Alerts and Updates
A recap of Alerts and Updates provided to MBS Live subscribers.
1:12PM  :  ALERT ISSUED: Weak 5yr Auction Adding Modest Pressure
10:25AM  :  Unfazed by Balmy Consumer Confidence

MBS Live Chat Highlights
A recap of featured comments from the Live Discussion on the MBS Live Dashboard.
Matthew Graham  :  "C-"
Matthew Graham  :  "RTRS - U.S. SELLS $38 BLN 5-YEAR NOTES AT HIGH YIELD 2.997 PCT, AWARDS 44.70 PCT OF BIDS AT HIGH"
Oliver Orlicki  :  "Not sure how the FED cannot be hawkish tomorrow"

Economic Calendar
Time Event Period Actual Forecast Prior
Tuesday, Sep 25
9:00 CaseShiller 20 mm nsa (%) Jul +0.3 0.5 0.5
9:00 CaseShiller 20 yy (% ) Jul +5.9 6.2 6.3
9:00 CaseShiller 20 mm SA (%) Jul +0.1 0.1 0.1
10:00 Consumer confidence * Sep 138.4 132.0 133.4
13:00 5-Yr Note Auction (bl)* 38