The bond market has seen one too many "stay thirsty" memes.  For example, "I don't always rally for more than a few days in a rising rate environment, but when I do, it's because of massive stock losses."  

As we've discussed quite a few times recently (and really, any time that stock losses start pulling bond yields lower), there are diminishing returns.  Bonds have a thirst that will only be quenched by significantly more abrupt panic in stocks.  While today's stock volatility might have looked like panic earlier this month, at this point in the correction cycle, it was just another day.  Bonds weren't impressed.

10yr yields were moderately higher through the morning hours, but began to recover as stocks moved lower in the afternoon.  New tariff headlines caused the stock selling to accelerate, but bonds were waiting for an update from Treasury on estimated issuance for Q4.  Once that came in favorably for bonds, they were more willing to rally, but never enough to move back into positive territory for more than a split second.


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
100-09 : -0-03
Treasuries
10 YR
3.0868 : +0.0108
Pricing as of 10/29/18 4:59PMEST

Today's Reprice Alerts and Updates
A recap of Alerts and Updates provided to MBS Live subscribers.
3:10PM  :  Bonds Bouncing Back on Tariff Talk and Treasury Announcement
10:07AM  :  ALERT ISSUED: Modest Negative Reprice Risk For a Few Lenders
8:55AM  :  Bonds Holding Overnight Weakness After PCE Data

MBS Live Chat Highlights
A recap of featured comments from the Live Discussion on the MBS Live Dashboard.
Matthew Graham  :  "3.00-3.03. Cases could be made for anything in that range being a relevant technical level"
Timothy Baron  :  "MBS underperforming so far."
Sung Kim  :  "3.02 next level MG?"
Matthew Graham  :  "the spike lower in stocks at 2:02pm ET was tariff headlines specifically"
Ted Rood  :  "No kidding. Especially considering month's end"
Matthew Graham  :  "double whammy in favor of bonds, but would like to see a bit better response"
Matthew Graham  :  "stocks also getting hit by new tariff threat"
Matthew Graham  :  "RTRS - U.S. TREASURY SAYS EXPECTS TO ISSUE $356 BILLION IN NET MARKETABLE DEBT IN FIRST QUARTER OF 2019"
Matthew Graham  :  "RTRS - U.S. EXPECTS TO ISSUE $425 BILLION IN NET MARKETABLE DEBT IN FOURTH QUARTER, DOWN $15 BLN FROM PREVIOUS ESTIMATE"
Victor Burek  :  "Stocks, Yuan Tumble On Report US To Announce Tariffs On All China Imports If Trump-Xi Meeting Fails"
Sung Kim  :  "we could be making a run for Friday's lows, will not be pretty if we blow through"
Sung Kim  :  "wow - stocks are in a day for reckoning soon, crazy stuff, eerily similar to the dot.com moves"

Economic Calendar
Time Event Period Actual Forecast Prior
Monday, Oct 29
8:30 PCE (y/y) (%)* Sep +2.0 2.2
8:30 Core PCE (y/y) (%)* Sep +2.0 2.0 2.0
Tuesday, Oct 30
9:00 CaseShiller 20 yy (% ) Aug 5.8 5.9
9:00 CaseShiller 20 mm SA (%) Aug 0.1 0.1
9:00 CaseShiller 20 mm nsa (%) Aug 0.4 0.3
10:00 Consumer confidence * Oct 136.0 138.4