Throughout the week, we've had our eyes on the long term downtrend in rates stretching back to the beginning of 2014.  It provided some context for the relatively brutal uptrend that's taken shape in September.  Until this morning, we could say that yields were STILL inside that long term downtrend.  But now this morning's weakness now presents the biggest break of that trend we've seen since it began.

2014-9-12 trend

Even now, it's too soon to conclude that it's "game over" for bond markets in 2014, but unless we see an impressive rally into the close today, we've effectively lost a layer of insulation against that risk.  The only hopeful thing about breakouts like this is that they can sometimes be the signal that markets were waiting for before pushing back on a trend.  In that regard, a nice afternoon bounce back could be encouraging.

As for the minutia, Treasuries were a few bps higher overnight, and without regard to any specific events or headlines.  Fannie 3.5s opened an eighth of a point weaker and gradually lost another 6/32nds by 11am.  10yr yields were up as high as 2.607 by then.  Data didn't matter--as has been the case almost universally of late.  After 2 solid bounces at 2.607, Treasuries are leading a bounce back to slightly better levels with Fannie 3.5s now down only 6 ticks total (101-19) and 10yr yields up only 3.4bps to 2.585.


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
97-26 : -0-11
FNMA 3.5
101-20 : -0-09
FNMA 4.0
104-31 : -0-06
Treasuries
2 YR
0.5600 : +0.0040
10 YR
2.5850 : +0.0530
30 YR
3.3240 : +0.0690
Pricing as of 9/12/14 11:59AMEST

Morning Reprice Alerts and Updates
A recap of Alerts and Updates provided to MBS Live subscribers.
9:13AM  :  Bond Markets Weaker Again After Bumpy Overnight Session and Stronger Retail Sales

Live Chat Featured Comments
A recap of featured comments from the Live Discussion on the MBS Live Dashboard.
dustin mcalister  :  "reading your overbought article, so is this the pattern basically i was talking about yesterday that we seem to be having all year...seems almost automatic, run down in rates, stay then back up, run back down a little more, stay, then back up again for a week or so"
Jeff Anderson  :  "Hopefully we're in the midst of sell the rumor of next week's meeting."
Matthew Graham  :  "if for no other reason, because so many people believe this is all about the Fed. (I'm personally a bit skeptical, but the herd mentality is powerful)"
Matthew Graham  :  "pretty sure next week will be interesting regardless"
Oliver Orlicki  :  "if not, next week is going to be very interesting"
Matthew Graham  :  "RTRS- US AUG RETAIL SALES EX-AUTOS +0.3 PCT (CONS +0.3 PCT) VS JUL +0.3 PCT (PREV +0.1 PCT)"
Matthew Graham  :  "RTRS- US AUG RETAIL SALES +0.6 PCT (CONSENSUS +0.6 PCT) VS JUL +0.3 PCT (PREV UNCHANGED)"
David Rudnick  :  "you would think the red is something we would get used to. ..... nope. "
Victor Burek  :  "was as low as .87 a couple weeks ago"
Victor Burek  :  "bund at 1.03"
Scott Valins  :  "are the European bonds well off their recent lows?"