Bond markets began the day almost perfectly unchanged relative to yesterday's latest levels.  That means the nasty little afternoon selling spree was still priced-in as of this morning.  That continued to be the case until the 11am hour.

At that point, European markets were beginning a decisive risk-off move heading into the end of their trading day.  This was fueled primarily by Italy being put in the hot seat at an EU summit.  While that wasn't the initial aim of the summit, Italy became the focus due to concerns among other EU nations regarding adherence to budget rules. 

In other words, the other countries were telling mom and dad (EU Commission) "hey!  make Italy play fair."

Italy has been throwing a bit of a tantrum saying "I don't wanna and I'm not gonna!"

Stern Uncle Mario (Draghi), the family's financial guru told everyone "when one of you crazy kids isn't playing fair, it hurts the whole family."  (Draghi told Italy--indirectly--to knock it off).

Mom and dad agreed with Uncle Mario and said as much in their own words (EU Commission told Italy to knock it off).

This European family squabble did noticeable damage to EU stocks and caused a big rally in EU bonds that spilled over into the US.  Once European traders were done for the day, US markets leveled off and drifted sideways.


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
100-01 : +0-04
Treasuries
10 YR
3.1805 : +0.0015
Pricing as of 10/18/18 5:02PMEST

Today's Reprice Alerts and Updates
A recap of Alerts and Updates provided to MBS Live subscribers.
11:30AM  :  Europe Leading Bonds Back Into Stronger Territory
8:51AM  :  Limited Positive Reaction to AM Data

MBS Live Chat Highlights
A recap of featured comments from the Live Discussion on the MBS Live Dashboard.
Matthew Graham  :  "The inexplicable morning rally, the one I said was being led by EU bonds, is what we're talking about. When things are bad for italian bonds, they're good for core EU bonds, which then spill over and help out US bonds."
Matthew Graham  :  "EU commission is currently giving Italy a stern talking-to about it's budget"
Matthew Graham  :  "RTRS- EU COMMISSION SAYS ITALY'S DRAFT 2019 BUDGET WOULD NOT ENSURE DEBT REDUCTION ENVISAGED BY EU RULES"
Victor Burek  :  "ITALY'S PLANNED BUDGET DEVIATION IS `UNPRECEDENTED,' EU SAYS"

Economic Calendar
Time Event Period Actual Forecast Prior
Thursday, Oct 18
8:30 Philly Fed Business Index * Oct 22.2 20.0 22.9
8:30 Jobless Claims (k) w/e 210 212 214
10:00 Leading index chg mm (%) Sep 0.5 0.5 0.4
Friday, Oct 19
10:00 Existing home sales (ml)* Sep 5.30 5.34
10:00 Exist. home sales % chg (%)* Sep -0.7 0.0