Is this the "big one" or isn't it?!  That's what everyone with a vested interested in the stock market would like to know about the ongoing sell-off that's been in play during the fourth quarter of 2018.  The record highs at the end of September created a high.  These concerns ramped up significantly in the middle of December when stocks broke through their shorter-term resistance levels.

It may still be the case that December was just the tip of the iceberg for a much bigger downturn in stocks, but there's an equally good case to be made for a big bounce back in January.  Investors seem to have been betting on both sides of that debate this week with a few big losses followed by a few big bounces.  In each case, bonds are being brought along for the ride.

Bonds' involvement was more unpleasant yesterday as bond investors feared the big stock bounce might be in the works.  But today's overnight session brought more stock weakness and an almost full recovery for bonds.  The relatively strong 7-yr Treasury auction helped yields get all the way back to yesterday's lows by 2pm today.  Then stocks launched skyward at a frantic pace, easily erasing every last bit of overnight weakness. 

Bond yields spiked in response, but MBS didn't lose as much ground as Treasuries on a relative basis (nor had they gained as much in the first half of the day.  As such, there wasn't much cause for negative reprice risk, but there was yet another reminder that the broader market is on edge, and the next true wave of decisive momentum is likely to carry rates with it, for better or worse.