After the sorts of big movements seen yesterday, it's not uncommon to get an equally big movement back in the other direction.  That may well have been the case had it not been for the uncommonly sharp same-day reversal yesterday afternoon.  This arguably washed out what might have otherwise been a natural tendency to bounce back.

This also allowed bond markets to begin the overnight session on more neutral to positive footing.  Why positive?  When these big market shocks occur, it's like anything in the physical world being pulled much farther away from their central tendency than normal.  In the past, I've used the "guitar string" analogy.  The farther away from the center you pull it, the more forcefully it snaps back, and the longer it vibrates before returning mostly back to it's normal range.

Applied to bond markets, the "normal range" of the guitar string's travel would equate to the natural path of bond markets in the long term.  That path isn't important when we're analyzing the near term disruption.  What's important is realizing that the uncommonly big force applied to the string is going to have some near term repercussions in terms of volatility.  Because the proverbial string was able to get back to the other side of it's wide range yesterday, it was free to bounce back to the opposite side overnight, and then to bounce back again this afternoon.  The white line in the chart below shows the general path and reversals of 10yr yields relative to the recent trend.

2014-10-16 guitar

Long story short, most of the movement today is attributable to the aftershock from yesterday's move.  Bond markets didn't weaken enough to make any significant statement about heading higher in yield.  In fact, if anything, holding under the 2.17% area into the close is a technical victory as this was a big pivot point on the way down. 

All that having been said, it's not guarantee that resilience will continue.  The better way to think about it is that the door remains open for resilience to continue.  In other words, we can't be sure if we'll win, but we know we haven't lost yet. 

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
100-20 : -0-09
FNMA 3.5
103-21 : -0-05
FNMA 4.0
106-07 : -0-02
Treasuries
2 YR
0.3390 : +0.0310
10 YR
2.1520 : +0.0230
30 YR
2.9350 : +0.0260
Pricing as of 10/16/14 5:30PMEST
Today's Reprice Alerts and Updates
A recap of Alerts and Updates provided to MBS Live subscribers.
3:47PM  :  ALERT ISSUED: MBS Leaking to New Lows; Negative Reprice Risk Increasing
1:08PM  :  Negative Reprice Risk Remains Elevated
10:40AM  :  ALERT ISSUED: Negative Reprice Risk Increases; MBS at New Lows
9:58AM  :  ALERT ISSUED: Negative Reprices Already a Consideration for Some Lenders
9:46AM  :  Bond Markets in Positive Territory, but Well Off Best Levels
MBS Live Chat Highlights
A recap of featured comments from the Live Discussion on the MBS Live Dashboard.
Matthew Graham  :  "yeah, we have yet to see a definitive turn back higher in yield and in stock prices. Certainly a risk, but not confirmed"
Victor Burek  :  "plus with the volatility, you know secondary took away much more than justified"
Victor Burek  :  "if 2.18 holds, damage might be over"
aaron meyer  :  "so further damage doesn't happen?"
Victor Burek  :  "why lock when damage has already been done"
Matthew Graham  :  "3.5 and 3.0 are both about equally relevant right now RF"
Ryan Ford  :  "is the best coupon to be watching now the 3.5 for 30 Yr FNMA? "
Joshua Crater  :  "I'm locking everything I can now"
Matthew Graham  :  "Treasuries doing a good job of resisting break higher in stocks so far."
Matthew Graham  :  "depending on how much you like the technical approach, it seems significant that 10's are putting their foot down right at that 2.16-2.18 inflection point, especially in the face of new highs in stocks."