Bond markets were weaker in the overnight session, following Yellen's weird speech after the close yesterday.  I wouldn't have thought Yellen would depart so forcefully from last week's theses, but truth is stranger than fiction.  Somehow, we've gone from global growth concerns posing domestic inflation risks to "likely to hike in 2015" and the general thesis sounding more like "everything's gonna turn out fine."  It was--and still is--quite odd. 

Markets don't believe Yellen & Co. either.  Fed funds futures show less than a 40% chance of a 2015 rate hike.  Nonetheless, bonds reacted poorly at first.  The interesting thing is that any response to rate-hike prospects has now been completely reversed.  In other words, shorter term yields (which are more closely linked to the Fed Funds Rate) were the worse performers after Yellen.  Over the course of the overnight session, they steadily outperformed longer-term yields. 

All of the above indicates the weakness we're currently seeing is less to do with Yellen, and more to do with 'something else.'  As far as what that "something" might be, we could look at something as specific as the overnight strength in equities and European markets.  Or we could look at something as general as a simple attempt to hold the range amid ongoing uncertainty.

2015-9-25 range


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
100-22 : -0-06
FNMA 3.5
103-27 : -0-05
FNMA 4.0
106-12 : -0-03
Treasuries
2 YR
0.7040 : +0.0160
10 YR
2.1750 : +0.0470
30 YR
2.9680 : +0.0510
Pricing as of 9/25/15 11:44AMEST

Live Chat Featured Comments
A recap of featured comments from the Live Discussion on the MBS Live Dashboard.
Matthew Graham  :  "RTRS - UNIVERSITY OF MICHIGAN SURVEYS OF CONSUMERS SENTIMENT FINAL SEPT 87.2 (CONSENSUS 86.7) VS PRELIMINARY SEPT 85.7 AND FINAL AUG 91.9"
Matthew Graham  :  "RTRS- U.S. HOUSE AIMS TO PASS GOVERNMENT FUNDING BILL NEXT WEEK WITHOUT TAKING MONEY AWAY FROM PLANNED PARENTHOOD -REPUBLICAN LAWMAKERS"
Victor Burek  :  "The GDPNow model forecast for real GDP growth (seasonally adjusted annual rate) in the third quarter of 2015 is 1.4 percent on September 24, down slightly from 1.5 percent on September 17."
Matthew Graham  :  "RTRS- US FINAL Q2 GDP +3.9 PCT (CONSENSUS +3.7 PCT), PREV +3.7 PCT; FINAL SALES +3.9 PCT (CONS +3.5 PCT), PREV +3.5 PCT"
John Tassios  :  "MG is 100% on his headline of " Confused Markets". I think Yellen made error to talk policy outside of a regular FED meeting / presser. She should have just referred to the prev released FED stmt and only given general opinions on deflation and growth. My opinion, October if off the table since no presser is sch. This puts big emphasis on Dec. But, Dec hike may cause market more volatility and trade flow imbalances since many accounts do year end re-balancing in December."
Matthew Graham  :  "where's the redlining prosecution against Chase and Wells for offering their best rates to the richest clients in the richest areas? I mean, I'm sure there's really no limit to who the CFPB could sue for discrimination under this logic. "