Global financial markets have been engaged to the idea of sovereign QE from the European Central Bank for nearly a year.  After yesterday's Swiss surprise, they're just about married to it. 

What we've seen in markets during the first part of January has been akin to the emotionally charged time frame surrounding a wedding.  Yesterday would be the day when your loud, drunk Uncle Thomas (coincidentally, the same first name as the Swiss National Bank President) stood up and made some unintelligible rant.  No one expected uncle Thomas to have such an outburst, and it certainly shook the wedding guests.  But the show must go on.

Still, guests wonder what had Thomas spooked enough to make such an outburst.  Maybe he's knows something they don't know.  Some have concluded he thinks the marriage is doomed and wants no part of it.  Others have concluded he thinks the marriage will be successful, but that it will cost him a lot of money in some way. 

Whatever the case may be, the volatility we're currently seeing in financial markets is part of the courtship process with the notion of European sovereign QE.  The consensus has quickly become that the Swiss surprise makes some profound comment on the nature of that QE plan, but no one can quite agree on exactly what that is--much like the wedding guests who aren't sure what Uncle Thomas was getting at, but who know it must mean something.  Hence the volatility.

On top of all this, Draghi met with Merkel and pitched a QE plan.  The only foolish thing to do at this point when it comes to watching markets would be to assume that we've seen the any sort of peak in volatility.  The past two days will probably end up looking tame in hindsight, compared to what's coming up.

MBS Pricing Snapshot
Pricing shown below is delayed, please note the timestamp at the bottom. Real time pricing is available via MBS Live.
FNMA 3.0
102-24 : -0-18
FNMA 3.5
105-07 : -0-11
FNMA 4.0
106-27 : -0-04
2 YR
0.4710 : +0.0510
10 YR
1.8220 : +0.0940
30 YR
2.4510 : +0.0840
Pricing as of 1/16/15 1:05PMEST

Morning Reprice Alerts and Updates
A recap of Alerts and Updates provided to MBS Live subscribers.
10:28AM  :  ALERT ISSUED: Negative Reprice Risk Increasing More Rapidly Now
9:38AM  :  ALERT ISSUED: Early Negative Reprice Considerations
9:10AM  :  Bond Markets Pull Back After Franc the Tank Sobers Up

Live Chat Featured Comments
A recap of featured comments from the Live Discussion on the MBS Live Dashboard.
Andrew Horowitz  :  "MG has said it best, yesterday and today are Franc based moves, panic yesterday, calm headedness today"
Jeff Anderson  :  "So we've bought the rumor and will sell the news?"
Andrew Haynes  :  "mehh...i think its already all priced in right? pretty sure we all know its going to happen.."
John Tassios  :  "it depends VB, on ECB announcement next week. that may move bonds volatility enough to not rule out 2% or 1.50% range swings "
Matthew Graham  :  "RTRS- U.S. DEC CPI -0.4 PCT, BIGGEST DECLINE SINCE DEC 2008 (-0.3725; CONSENSUS -0.4 PCT), EXFOOD/ENERGY UNCHANGED (+0.0029; CONS +0.1 PCT)"
Scott Valins  :  "right? I'm very thankful for the biz, but the last two weeks have been some of the most intense that I can remember"
Jeff Anderson  :  "Was thinking the same a few mins ago, SV."
Scott Valins  :  "GM all. Would really love a flat day "
Jason Roaldson  :  "Nice Day Ahead article MG and if you tell me that was a nicely played Talking Heads reference in there, My Friday is complete"
Steve Chizmadia  :  "A pull back was expected and almost overdue. Too far too fast. "