We're typically talking about "the bond market in terms of 10yr Treasury yields," but in terms of PRICES, there was certainly some gravity in play coming into today.  This gravity lined up with the resistance level at 2.82% in yields.  In other words, the more yields fell toward 2.82%, the more resistance they'd likely experience.

The first 2 hours of the trading day made it look like the bounce at 2.82% was already in.  After coming close to breaking through the floor in overnight hours, bonds began the domestic session with a quick run up to 2.855%.  But the late morning hours sent yields right back to the floor with a combination of heavy losses in stocks and even heavier losses in oil.

In short, bond prices defied gravity.  This leaves us in the strongest part of the recent range heading into tomorrow's Fed events.  Those events include the announcement itself, the Fed's economic projections, and Powell's press conference.  All 3 are in play as potential market movers with the projections probably packing the biggest punch.


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
101-16 : +0-10
Treasuries
10 YR
2.8190 : -0.0380
Pricing as of 12/18/18 4:58PMEST

Today's Reprice Alerts and Updates
A recap of Alerts and Updates provided to MBS Live subscribers.
8:41AM  :  Stronger Overnight. Little-Changed After Housing Data

MBS Live Chat Highlights
A recap of featured comments from the Live Discussion on the MBS Live Dashboard.
Ted Rood  :  "Gotta think they hike, change language and dot plots to indicate fewer/further out future hikes."
Ted Rood  :  "More about future outlook than "hike/no hike""
Matthew Graham  :  "no point debating hike vs no hike tomorrow. At face value, it should be a possibility, but they can't risk not hiking for several reasons--not the least of which being political/independence-related. In order of importance, I'd be looking at the dots, any material changes in verbiage, and a very close 3rd: the press conference"
Chris Stevens  :  "I thought this comment was good...“‘Data dependent’ is the phrase they’re (FOMC) trying to get the market to focus on. It commits you to a response without committing you to a path,” said Charles Himmelberg, chief markets economist at Goldman Sachs."
Matthew Graham  :  "Fed's hiking"
Matthew Graham  :  "and nearly everyone who is trading or analyzing markets is and has been moving forward with that assumption since early September"
Matthew Graham  :  "The worst case has little to do with whether or not the Fed hikes and much more to do with the dots, the press conference, and the market reaction. We're definitely fairly well overbought in bonds, so it makes sense to be defensive about any sort of bounce back in stocks. If stocks manage to find the Fed soothing, that would be the worst case, but I don't think it would be catastrophic. Bonds have improved for reasons that aren't going to change very quickly. We might see some knee-jerk defensiveness, but I'd be surprised if the worst case was more than a double digit increase in 10yr yields."

Economic Calendar
Time Event Period Actual Forecast Prior
Tuesday, Dec 18
8:30 House starts mm: change (%) Nov +3.2 1.5
8:30 Build permits: change mm (%)* Nov 5.0 -0.4
8:30 Housing starts number mm (ml)* Nov 1.256 1.225 1.228
8:30 Building permits: number (ml)* Nov 1.328 1.259 1.265
Wednesday, Dec 19
7:00 MBA Purchase Index w/e 256.1
7:00 Mortgage Refinance Index w/e 851.6
10:00 Exist. home sales % chg (%)* Nov -0.6 1.4
10:00 Existing home sales (ml)* Nov 5.20 5.22
14:00 FOMC rate decision (%)* N/A 2.375 2.125