Treasuries weakened today as traders continued to price out a friendly Fed.  This wasn't necessarily destined to be the case after yesterday's Fed Announcement.  That, in and of itself, wasn't too threatening to bonds.  In fact, bot stocks and bonds rallied in the immediate wake of the release.

But once Powell got to talking, markets saw several of the talking points they were afraid of (i.e. foreign economic risks dying down, no case for a rate CUT, etc.).  With that, bonds sold off yesterday afternoon and arguably picked the same game-plan back up today.  

Selling kicked into higher gear when prospective Fed nominee Stephen Moore said he, too, saw no case for a big rate cut.  Probably not what Trump wanted to hear...  About 3 hours later, with no reason given, he withdrew his name from consideration.

It's not entirely clear if the Moore headlines constitute causality or correlation.  Either way, we can see lots of money moving out of the "friendly Fed trade" (i.e. buy stocks and bonds) yesterday afternoon and today.  Each big movement had strong correlation between stock and bond selling--exactly what we expect to see when markets are pricing-OUT Fed accommodation.

It could also be the case that traders were paring positions ahead of tomorrow's jobs report (less likely to explain the size and pace of the movement, but it could be contributing).  Either way, the combination of the jobs data and the ISM data that follows 90 minutes later could be more than enough to break yields out of this week's heretofore narrow closing range (2.50-2.54%).

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
100-28 : -0-03
10 YR
2.5450 : +0.0340
Pricing as of 5/2/19 5:37PMEST

Today's Reprice Alerts and Updates
A recap of Alerts and Updates provided to MBS Live subscribers.
11:29AM  :  ALERT ISSUED: Negative Reprices Becoming More Likely
11:09AM  :  ALERT ISSUED: Negative Reprice Risk Increasing
8:47AM  :  Little-Changed After Early Data

MBS Live Chat Highlights
A recap of featured comments from the Live Discussion on the MBS Live Dashboard.
Scott Valins  :  "yesterday AM's positive reprices before Fed announcement was a huge gift. Hope people got some good locks in."
Hugh W. Page  :  "Perhaps, but maybe the one that got him out of the running for the job :)"
Tom Schwab  :  "i don't think that is the top of the list of things he shouldn't have said"
Hugh W. Page  :  "He shouldn't have said he doesn't want a 1% Rate Cut by the Fed. Boss doesn't like to be disagreed with."
Rob Clark  :  "Stephen Moore withdraws name for Fed"
Matthew Graham  :  "biting my lip here. good things are coming"
E S  :  "Keep it going provide a great service to us and hopefully you’ll be able to keep expanding what you can offer to us."
Matthew Graham  :  "or thank CNBC, for caring about accuracy"
Matthew Graham  :  "thank you"
E S  :  "Just saw the MND Mortgage rates on CNBC in the bottom right...WTG MG!!!!"

Economic Calendar
Time Event Period Actual Forecast Prior
Thursday, May 02
8:30 Labor Costs Preliminary (%) Q1 -0.9 1.5 2.0
8:30 Jobless Claims (k) w/e 230 215 230
10:00 Factory orders mm (%) Mar +1.9 1.5 -0.5
Friday, May 03
8:30 Non-farm payrolls (k)* Apr 185 196
8:30 Unemployment rate mm (%)* Apr 3.8 3.8
10:00 ISM N-Mfg PMI * Apr 57.0 56.1