The overnight trading session was thinly-traded due to a holiday closure in Tokyo.  Buyers outnumbered sellers until the domestic session.  Promptly after the 820am CME Open, sellers showed up in US Treasuries.  Bond market weakness radiated out from there.  By the end of the day, it would become more clear that some of the selling was related to corporate debt hedging (read more about why that matters HERE).

Bonds were weaker throughout the morning hours, and then leveled off after European markets closed.  It's not uncommon to see Treasuries level-off or reverse course right after European bond markets close.  This can happen for a variety of reasons although it can be as simple as a sudden drop in market participation that happens when only one of the three continental areas is trading (Asia, Europe, or the Americas).

There were no significant economic reports today, but we did get a few bullet points from the newer Fed Vice Chair Richard Clarida, who said the December rate hike was the right call but softening data means the Fed can take some decisions on a meeting-by-meeting basis.  He added his 2 cents on the balance sheet, saying the Fed wouldn't hesitate to adjust it if needed. 

The day ended with bonds effectively unchanged after being moderately stronger right at the open.  Both of our bullish targets were tested in 10yr yields (2.66 and 2.69).  Neither was broken (as that would require yields remaining underneath those targets at least through today's close, and officially for 2 consecutive closes).


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
101-30 : -0-01
Treasuries
10 YR
2.7020 : +0.0030
Pricing as of 1/14/19 4:28PMEST

Today's Reprice Alerts and Updates
A recap of Alerts and Updates provided to MBS Live subscribers.
11:48AM  :  ALERT ISSUED: Negative Reprice Risk Increasing as Bonds Hit Weakest Levels
9:06AM  :  Modest Overnight Gains Quickly Given Back

MBS Live Chat Highlights
A recap of featured comments from the Live Discussion on the MBS Live Dashboard.
Victor Burek  :  "seems this year is starting off faster than last year"
Jeff Anderson  :  "Still no supply"
Jason Anker  :  "buyer demand is strong"

Economic Calendar
Time Event Period Actual Forecast Prior
Tuesday, Jan 15
8:30 Producer Prices (%) Dec -0.1 0.1
8:30 NY Fed Manufacturing Jan 10.75 10.90
8:30 Core Producer Prices YY (%)* Dec 2.9 2.7