It's hard to fault the bond market for any trading over the past several days.  The data and the movement in other markets have both suggested bond market weakness fairly clearly.  Despite that, the weakness has been reasonably well contained.  For example, 2.75% in 10yr yields has been our best case ceiling--one we began to discuss on the initial bounce last Friday.  As of this afternoon, 10yr yields closed at 2.746%.

All that having been said, being this close to 2.75% makes it that much easier to break.  Whether or not it breaks may be as much a function of the stock market as anything.  Bond yields have been quite willing to reconnect with stocks after the late-2018 disconnect.

Stocks are staging near a ceiling of the their own--essentially the inflection point between the first and second half of December's trading range (in terms of the S&P, anyway).  If stocks move back up into early December territory, it could easily coincide with a break above 2.75% for 10yr yields.

All of the above is splitting hairs for the most part.  In early December, bond yields were moving down from above 3%.  So to be discussing any anxiety about a move above 2.75% is a 1st-world problem for now.  Simply put, bonds are trading well (not like they want to rapidly bounce back to higher yields), but are unavoidably tuned in to the fate of the stock market.  

Stocks presented the key motivation for today's movement, themselves somewhat interested in comments from Fed Chair Powell.  Government shutdown updates also caused volatility, largely to the benefit of stocks.  It wasn't that lawmakers moved closer to an agreement.  Rather, the ratings agency Moodys said that the shutdown, in and of itself, wouldn't have an immediate negative effect on the US' credit rating.


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
101-28 : -0-02
Treasuries
10 YR
2.7460 : +0.0180
Pricing as of 1/10/19 5:27PMEST

Today's Reprice Alerts and Updates
A recap of Alerts and Updates provided to MBS Live subscribers.
1:08PM  :  ALERT ISSUED: Bonds at Weakest Levels After Sloppy Bond Auction
11:25AM  :  Bonds Under Pressure but MBS Outperforming

MBS Live Chat Highlights
A recap of featured comments from the Live Discussion on the MBS Live Dashboard.
Matthew Graham  :  "RTRS - FED'S BULLARD SAYS FED HAS COME TO 'END OF THE ROAD' ON RATE HIKES"
Matthew Graham  :  "For the record, there's a ton of room between "substantially smaller than it is now" and "still substantially bigger than before the Financial Crisis.""
Sung Kim  :  "looks like stocks are a few days from rolling over, the current melt up looks very close to exhausted"
Matthew Graham  :  "RTRS - POWELL SAYS HIS PRINCIPAL WORRY IS OVER GLOBAL GROWTH, AND HOW MUCH THAT WOULD IMPACT THE U.S."
Matthew Graham  :  "RTRS - POWELL SAYS WORRIED ABOUT EXTENT OF U.S. DEBT IN THE LONG RUN"
Matthew Graham  :  "RTRS - POWELL SAYS BALANCE SHEET WILL END UP 'SUBSTANTIALLY SMALLER' THAN IT IS NOW, THOUGH ENDPOINT OF RUNOFF STILL NOT CERTAIN"
Matthew Graham  :  "POWELL: MEDIAN RATE FORECAST CONDITIONAL ON VERY STRONG OUTLOOK FOR 2019 - Dow Jones News"
Matthew Graham  :  "RTRS - POWELL, ASKED ABOUT TWO RATE HIKE MEDIAN IN THE SUMMARY OF ECONOMIC PROJECTIONS, SAYS FED HAS NO PARTICULAR 'PLAN' TO RAISE RATES A SPECIFIC NUMBER OF TIMES"

Economic Calendar
Time Event Period Actual Forecast Prior
Thursday, Jan 10
8:30 Jobless Claims (k) w/e 216 225 231
13:00 30-Yr Bond Auction (bl)* 16
Friday, Jan 11
8:30 Core CPI Year/Year (%)* Dec 2.2 2.2
8:30 CPI mm, sa (%)* Dec -0.1 0.0