There were no significant scheduled events in the offing today.  Volumes were down sharply in the bond complex as well (less than 50% of recent highs).  That made for a bit of a slippery slope of illiquidity as last week's short positions were flushed out and day traders chased a few big options trades.  If there was actual underlying inspiration, the best case to be made was for general global growth anxiety with a growing list of anecdotes providing cause for concern rather than hope.

All of the above helped Treasuries rally sharply, with 10yr yields making it as low as 1.628% by the afternoon and officially closing at new multi-year lows.  MBS, on the other hand, had a downright frustrating day.  They were generally unable to take part in the rally.  Fannie 3.0 coupons struggled to return to Friday's best levels whereas 10yr Notes surpassed theirs just after 10am and never looked back.  When MBS got close to Friday's highs, they bounced abruptly and gave up more than half of the day's gains.

The MBS vs Treasury performance is to be expected on a day where Treasuries rally significantly and hit long-term lows.  Lenders are also taking a hit from the increased hedging costs associated with the volatility and ultra fast trip to ultra low rates.  Bonds have to level-off if we're going to see major improvements.


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 3.0
101-20 : +0-07
Treasuries
10 YR
1.6400 : -0.0940
Pricing as of 8/12/19 5:59PMEST

Today's Reprice Alerts and Updates
A recap of Alerts and Updates provided to MBS Live subscribers.
12:36PM  :  Bonds Riding Wave of Generalized Market Anxiety

MBS Live Chat Highlights
A recap of featured comments from the Live Discussion on the MBS Live Dashboard.
Matthew Graham  :  "and it's definitely not way too much to explain. It's really simple: MBS find rate rallies to be intoxicating and pleasant. This particular rally is tantamount to alcohol poisoning. Last thing they wanted this morning was another drink."
Matthew Graham  :  "I'm sorry that others who came before me have done you the disservice of just punting the explanation of mortgage rate movement to the "watch the 10yr" side of the field."
Ray Leone  :  "I spend most of my career (and advising my clients) to watch the 10 yr bond for insight on mortgage rate (direction). And now I am being told "don't pay attention to the man behind the curtain..."). MG, I certainly found the article you sent out last week explaining the lag, but this is way too much to explain simply to a borrower w/o getting egg on my face. You have presented this issue well and all I can do in complain. Sorry :-("
Brian McFarlane  :  "Circular on changes to VA loan limits and funding fees is out. https://www.benefits.va.gov/homeloans/documents/circulars/26_19_23.pdf"