Move over Pontiac.  Bond market volatility is driving excitement. 

While that may be one of the worst sentences I've ever written, it has the redeeming quality of being true.  Things are really getting interesting for the long and short term fate of bond market momentum.

For the past two mornings, I've been suggesting that a corrective bounce was approaching, regardless of the economic data.  We didn't get it yesterday, and that made it increasingly likely to happen today or tomorrow.  (Hint: it's happening today).

The German Bund rout went out with a bang in the overnight session with 10yr Bunds skyrocketing to 0.80.  It was barely 2 weeks ago when they were at 0.05!  So yes... Bunds are the most meaningful ingredient in the recent Treasury weakness because they're yelling the loudest.   Last night was no exception as US 10's were dragged all the way up to 2.312.

But at that point, sellers were spent.  We knew it was coming, and that's when it came (just after 5am ET).  Bunds and Treasuries both started recovering from that point on and the recovery kicked into higher gear when US traders fired up screens in the morning.  Treasuries eagerly led the charge back down under 2.20% 10yr yields.  MBS reluctantly followed (as most MBS reactions to Treasury volatility have been reluctant).  Still... we can't complain if we're moving in the right direction.

Of course economic data was ignored, not only because it was Jobless Claims, but also because the true steamroller is the technical correction.  Yes, it is easier to say "of course" in hindsight, but the sentiment is consistent with my "correction" outlook over the past two days. 

The fact that we got the correction today means that tomorrow's NFP is less encumbered.  It can have a more natural effect on trading levels if markets truly care about the data.  That's exciting because if markets move in the opposite direction from that suggested by NFP, they will very likely continue moving in that direction in the coming weeks.  It's one of the few situations where we actually may be getting a glimpse at a crystal ball.


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
101-02 : +0-12
FNMA 3.5
104-09 : +0-09
FNMA 4.0
106-21 : +0-06
Treasuries
2 YR
0.6430 : +0.0040
10 YR
2.1890 : -0.0630
30 YR
2.9170 : -0.0890
Pricing as of 5/7/15 1:34PMEST

Morning Reprice Alerts and Updates
A recap of Alerts and Updates provided to MBS Live subscribers.
10:38AM  :  Bonds Rally Back After Wild Night; Morning MBS Strength Presents Risks

Live Chat Featured Comments
A recap of featured comments from the Live Discussion on the MBS Live Dashboard.
Dennis Oleesky  :  "there should be a disclosure for that: it should state your title company is slow and possibly lazy, therefore I have to disclose these fees that are not acurate"
Tom Marchioli  :  ""We overdisclose because we don't control them..""
Ted Rood  :  "I have been waiting for 8 business days for the attorney/title fees on a purchase. Asked for them last Monday. Had to disclose, so jacked up projections to be safe. Borrower then asked why the title costs were so high......"
Tom Marchioli  :  "Realtor says their guy never had to do this."
Tom Marchioli  :  "Attorneys will be blaming bank, bank blaming attorney.."
Tom Marchioli  :  "I'm not sure anyone ever knows how that math works out that they do. If I'm paying you what they are, I expect more concrete numbers than a legal pad done on the fly at my closing."
Tom Marchioli  :  "Quite often it's hurry up and wait for the attorneys to work out their issues since they never reviewed title during your 30 day processing of mortgage."
Tom Marchioli  :  "I agree with JA. In NY, it's going to be an attorney nightmare. Most don't do their work until the day before closing it feels like."
Jason Anker  :  "I see more issues with realtors and lawyers, it’s an oil/water/taxes/walk thru nightmare. "
Thomas Quann  :  "30 days or less"
Jason Harris  :  "In current environment how long do you feel comfortable promising a closing? Not looking for hail mary....looking for what you feel comfortable putting your name behind assuming all parties cooperate. Very unofficial poll (looking at non-attorney states)"
Matthew Graham  :  "bizarro world already explained"
Matthew Graham  :  "read the day ahead (if you haven't)."
Steven Koerner  :  "Are we in bizarre world?"
Jason Anker  :  "Let the leaking begin"
Matthew Graham  :  "RTRS- US CONTINUED CLAIMS FELL TO 2.228 MLN (CONS. 2.280 MLN) APRIL 25 WEEK FROM 2.256 MLN PRIOR WEEK (PREV 2.253 MLN)"
Matthew Graham  :  "RTRS - US JOBLESS CLAIMS ROSE TO 265,000 MAY 2 WEEK (CONSENSUS 280,000) FROM 262,000 PRIOR WEEK (PREVIOUS 262,000)"