There were no significant economic reports today and no obvious market-moving news headlines.  Nevertheless, bonds went on yet another snowball rally run to new long-term lows.  

Today's version was even more interesting than some of last week's examples.  Case in point, 2yr yields ended the day down nearly 7bps while 30yr bonds barely gained any ground.  What's up with that?!

Part of the reason is the extent to which the opposite phenomenon was in fashion heading into the end of last week.  Traders are booking profits on those curve flattener trades (betting on longer term yields falling to be closer to short-term yields).  Profits on those trades could either be booked by selling longer-term bonds or buying short-term bonds.  

None of this is really important though!  The fact is that rates continued to drop on a day with no apparent motivation to levels that are even deeper into long-term lows.  When we go digging for motivation, the only viable conclusion is that of a short-squeeze causing snowball buying, with the latter being exacerbated by algorithmic trading.

MBS Pricing Snapshot
Pricing shown below is delayed, please note the timestamp at the bottom. Real time pricing is available via MBS Live.
FNMA 3.5
101-14 : +0-03
10 YR
2.4050 : -0.0500
Pricing as of 3/25/19 6:12PMEST

Today's Reprice Alerts and Updates
A recap of Alerts and Updates provided to MBS Live subscribers.
2:22PM  :  Another Snowball Rally For Bonds With MBS Underperforming
10:55AM  :  Bonds Back to 'Unchanged' After Modest Overnight Weakness

MBS Live Chat Highlights
A recap of featured comments from the Live Discussion on the MBS Live Dashboard.
Matthew Graham  :  "All that having been said, it's good to consider what rates have been doing for end users. Price vs price isn't always the best representation of TSY/mortgage performance. Best I can tell, 30yr fixed mortgages have kept MUCH better pace with 10yr yields than any MBS price has kept with 10yr Treasury prices."
Matthew Graham  :  "the immediacy of the move also favors Treasuries. In other words, if they were to stop here, MBS would close the gap a bit. But yes, the bond buying regime change doesn't help."
Joel Marks  :  "Sorry to ask again, MG, but apart from the lack of Fed buying, is there a reason for the tremendous underperformance of MBS? Last time we were at 2.41, the 4.0 coupon was around 105. Seems like the 10 year would have to hit 1.0 for us to see rates in the low 3s again."
Bryce Schetselaar  :  "it will be the iMortgage, Ted"
Ted Rood  :  "Apple Mortgages will be for sure."
Matthew Graham  :  "Apple credit card must be a sign of the end times"
Jeff Anderson  :  "The all buying and no selling is confirming something."
aaron meyer  :  "Yes"
John Tassios  :  "MG, are late afternoon volumes confirming this move in bonds?"

Economic Calendar
Time Event Period Actual Forecast Prior
Tuesday, Mar 26
8:30 Build permits: change mm (%)* Feb -0.7
8:30 Housing starts number mm (ml)* Feb 1.213 1.230
8:30 House starts mm: change (%) Feb 18.6
8:30 Building permits: number (ml)* Feb 1.300 1.317
9:00 CaseShiller 20 yy (% ) Jan 4.0 4.2
9:00 Monthly Home Price yy (%) Jan 5.6
10:00 Consumer confidence * Mar 132.0 131.4