If trading days were sporting events, today would be a great game.  There were several score changes, but the home team came out strong after half-time for a decisive victory.

Early in "the game," bond markets struggled slightly with Treasuries heading into weaker territory during the European session.  The first reversal in momentum came after one of several competing headlines about Russian military something-or-other apparently fueled some flight-to-safety demand in Europe with the bond market strength spilling over to US Treasuries.  A general falling-off in equities futures both before and after the Russia headlines only helped the cause.

The next major reversal came after the New Home Sales data, which was much stronger than expected.  Now, of course this is a bit of an eyebrow-raiser because all the recent Housing data has been weak, but keep in mind several things:

  • Most of the other housing data is measuring closed sales whereas today's measures contracts. 
  • Today's regional breakdown showed the Northeast in similar shape to the Housing Starts data (where it was also a big, weird, positive outlier).  Maybe something's going on out there?  I don't know... Just saying that's 2 times now.  If we look at weather averages, December was historically rougher than January, so it's possible the latter served as some sort of pressure release, simply by being 'less bad,' but that's a big stretch.
  • Less of a stretch is the fact that New Home Sales has underperformed all the other housing data over the past 6 years and retraced the smallest proportion of its crash.  In that sense, it has plenty of room to continue closing the gap to its peers and today's 'amazing' strength barely gets it to historically awful levels. 

Whatever the truth turns out to be, markets reacted and bond markets weakened into the 1pm Treasury auction, which was indeed amazing, with no need for sarcastic quotation marks.  After that, the tide turned and bond market strength was in control for the rest of the day, delivering medium-sized improvements for Treasuries and MBS after a morning where it could have either way.

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
97-03 : +0-07
FNMA 3.5
101-11 : +0-07
FNMA 4.0
104-24 : +0-07
Treasuries
2 YR
0.3284 : -0.0186
10 YR
2.6638 : -0.0372
30 YR
3.6258 : -0.0352
Pricing as of 2/26/14 4:33PMEST
Today's Reprice Alerts and Updates
A recap of Alerts and Updates provided to MBS Live subscribers.
2:19PM  :  ALERT ISSUED: Another Push to New Highs; Positive Reprice Potential
1:28PM  :  MBS Jump to Best Levels after 5yr Auction
11:33AM  :  ALERT ISSUED: Uneven Negative Reprice Risk Heavily Dependent on Lender
10:30AM  :  Almost Comically-Better-Than-Expected Home Sales put Crimp in Rally
9:39AM  :  After Losing Ground Overnight, Bond Markets Bounce Back
MBS Live Chat Highlights
A recap of featured comments from the Live Discussion on the MBS Live Dashboard.
Victor Burek  :  "mg, auction preview?"
Matthew Graham  :  "Auction Preview: 8 out of the last 8 5yr auctions have come in at or higher than the expected yield (based on "when-issued" yield). Bid to cover was rough last summer, ranging from 2.38 to 2.46. It rebounded to 2.6's for the most part, but hit 2.42 in mid December. That was a challenging auction though, and this one should be less so. Probably a non-event. For more on auction-related jargon, see this: http://mndne.ws/1gIJmzh"
Matthew Graham  :  "RTRS- U.S. SELLS $35 BLN 5-YEAR NOTES AT HIGH YIELD 1.530 PCT, AWARDS 61.52 PCT OF BIDS AT HIGH"
Matthew Graham  :  "RTRS - U.S. 5-YEAR NOTES BID-TO-COVER RATIO 2.98, NON-COMP BIDS $56.83 MLN"
Matthew Graham  :  "RTRS- HIGH YIELD AT LATEST 5-YEAR NOTE SALE WAS LESS THAN 1 BASIS POINT BELOW ITS 1 P.M. WHEN-ISSUED LEVEL - REUTERS DATA"
Victor Burek  :  "pretty good?"
Matthew Graham  :  "A++"