First things first: all of the volatility we're about to discuss has been occurring inside a fairly narrow range in the slightly bigger picture.  Moreover, much of that narrow range exists inside an even bigger version of a 'narrowing' range (i.e. the "consolidation pattern" that's existed for several months.  

With all that out of the way... BREXIT!  Yes, it's a market mover even though we're talking about politics on the other side of the world.  And no, it doesn't really make much sense, but I will give a brief 10 cent tour.

Some politicians in The UK thought life would be better if the country left the EU.  Voters agreed, albeit by a razor thin margin, and probably without ever being able to understand the economic ramifications of their vote.  Nonetheless, the will of the people is the will of the people, so the Brexit process continued apace for the past 3 years.

March brought the first deadline which was then extended to October 31st, 2019.  It looked like there wouldn't be a viable deal, but markets figured the whole thing wouldn't go down without a fight, so we didn't see much of a freak-out.  Sure enough, 2 weeks ago British and Norther Irish PMs agreed on a conceptual deal.  That paved the way for a more serious version of the deal that the EU agreed to last week, but British parliament still had to sign off.  They didn't sign off this past Saturday because there wasn't enough meat on the table.  British government delivered more meat since then and Parliament voted on a conceptual deal today (basically a vote to say  they were willing to pass a deal as long as the details made sense).  They then refused to commit themselves to evaluating those details in only 2 days time.

Deep breath!

By refusing to render final approval by Thursday, Parliament is probably unable to get something on the EU's desk in enough time to avoid going past the October 31st deadline the EU had set for Brexit.  As such, an extension is likely and we're just waiting to find out how long it will be and if there are any interesting terms.  

The bottom line is that a DEAL Brexit (as opposed to a "no deal Brexit") remains a definite possibility.  That's the greater of two evils for the bond market and a big reason that rates are well off their recent lows.  The back and forth today (and in recent days) regarding these prospects have been almost perfectly aligned with bond market volatility.  The end.

Seriously, that's about the size of it, but I will offer this caveat: I am but a humble unfrozen caveman bond market analyst type of guy.  I know nothing of the intricacies of European politics and British parliamentary procedure beyond what can be gleaned from quick minutes of furious googling when trader friends mention Brexit as a market mover.  I might be missing something here and, if so, please feel free to reach out.  That said, I think we're on the right track.  Either way, this is NOT the be all, end all of big picture market movers.  It is something that is worth volatility inside a range or the augmentation of a trend that exists for other reasons.  Brexit headlines can continue causing volatility inside a range (or perhaps even threatening to break us out of a range), but they may be counteracted by other relevant market movers.  These include, but are not limited to, Thursday's slate of economic data, impeachment developments, auction cycle considerations, technical trading motivations, stock market reaction to earnings, and likely 3 or 4 things I haven't yet considered.

Today, however, things worked in our favor as British parliament wasn't willing to slam the deal through without saving sufficient time for debate.  


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
100-31 : +0-03
Treasuries
10 YR
1.7680 : -0.0240
Pricing as of 10/22/19 5:41PMEST

Today's Reprice Alerts and Updates
A recap of Alerts and Updates provided to MBS Live subscribers.
2:36PM  :  Bond Losses Reverse Course as Brexit Timetable Vote Rejected
2:17PM  :  ALERT ISSUED: Negative Reprice Risk Increasing
10:15AM  :  Stronger Overnight As EU Tone Cools, But Susceptible to Headlines

MBS Live Chat Highlights
A recap of featured comments from the Live Discussion on the MBS Live Dashboard.
Matthew Graham  :  "no-deal would be good for rates, but few believe it will come to that"
David Rudnick  :  "no deal Brexit would be great for rates right.... and total anarchy"
Matthew Graham  :  "big GBP moves on that one"
Matthew Graham  :  "BREXIT: TORY MP TEXTS AGAIN FROM THE GOVERNMENT LOBBY, THINKS THERE AREN’T ENOUGH MPS THERE SO PROGRAMME MOTION WILL BE LOST- SPECTATOR MAGAZINE"
Matthew Graham  :  "BREXIT: DUP MPS WILL VOTE AGAINST PROGRAMME MOTION- SPOKESPERSON"
Matthew Graham  :  "Brexit procedural hurdle cleared. Time table not yet voted on, and it would still need to clear the other house of Parliament"
Matthew Graham  :  "BREXIT: UK LAWMAKERS BEGIN VOTING ON TIMETABLE FOR BREXIT DEAL LEGISLATION, RESULT DUE IN AROUND 15 MINS"
Andy Pada, Jr.  :  "hahahahaha"
Matthew Graham  :  "Yep. He moved to Caliber, apparently, and was put in charge of non sequitur reprices"
Andy Pada, Jr.  :  "didn't realize that Draghi gone"
Jay Rodriguez  :  "
REPRICE: Caliber HL - Worse
"
Matthew Graham  :  "intraday, sure. Floating overnight, all bets are off. But yes, the ramblers and gamblers are hoping for a bounce in the bigger-picture consolidation."
Sung Kim  :  "we are top of the channel, why lock unless there is serious damage and then this site gives the warning well ahead of time"
Dmitriy S  :  "MG, next time there's politics in the chat, I suggest you write "Ordahhhhh""

Economic Calendar
Time Event Period Actual Forecast Prior
Tuesday, Oct 22
10:00 Existing home sales (ml)* Sep 5.38 5.45 5.49
10:00 Exist. home sales % chg (%)* Sep -2.2 -0.7 1.3