After at least 2 days of (or more) of relatively disconnected markets (i.e. trading levels weren't reliably following any single market mover), today is starkly different.  There's one single elephant in Friday's room, or perhaps it's a small blue birdie.  

A Trump tweet late yesterday was all it took to start a snowball of massive bond-buying demand.  Simply put, Trump "announced" new tariffs on Mexico in much the same way he did for China on May 5th.  Stock prices and bond yields reacted immediately in the overnight session by moving sharply lower.  The domestic trading session saw both hold relatively steady--and even reverse course slightly--until European markets closed.  After that, stocks and rates slipped to new lows for the day.

For the bond market, yields hit new lows not just for the day, but also for the week, month, and year.  We now have to go back to 2017 to see anything lower.  The ability of this move to continue is only limited by the persistence of inflammatory trade-related headlines and the weakness in any of next week's economic data.


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 3.5
102-00 : +0-10
Treasuries
10 YR
2.1310 : -0.0940
Pricing as of 5/31/19 4:55PMEST

MBS Live Chat Highlights
A recap of featured comments from the Live Discussion on the MBS Live Dashboard.
Matthew Graham  :  "it came across about 20 minutes ago, BB, but I didn't post at the time. Seemed more germane now"
Brent Borcherding  :  "There is NO doubt that any political party would & do what they can to help get themselves elected or reelected. The trade war with China is real, though, and its a battle that was always going to come with short term cost if it was ultimately to be won. "Winning" may or may not happen but if it does it will be kerosene on a fire for the US economy."
Timothy Baron  :  "Roaring econ numbers help him much more in 2020 than in 2019."
Brent Borcherding  :  "I feel like you made that one up, MG."
Timothy Baron  :  "MG, I've been thinking the same thing for a while about maybe this is all just Trump's 2020 strategery. Pump the economic brakes in 2019, then mash the accelerator in 2020."
Matthew Graham  :  "BARCLAYS NOW SEES U.S. FEDERAL RESERVE CUTTING INTEREST RATES BY 75 BASIS POINTS LATER IN 2019, STARTING IN SEPTEMBER"
Victor Burek  :  "i agree, no idea why rate cuts even on the table"
Brent Borcherding  :  "It's CRAZY to me that the Fed would make cuts this year unless the trend grew extremely unfriendly. At worst this is currently just a slow down, and it may not even be that."

Economic Calendar
Time Event Period Actual Forecast Prior
Friday, May 31
8:30 Core PCE Inflation (y/y) (%)* Apr +1.6 1.6 1.6
9:45 Chicago PMI * May 54.2 53.7 52.6
10:00 Consumer Sentiment (ip) May 100.0 101.5 102.4