Whether today had ended up positive or negative, the assessment would be the same.  It strains credulity to consider, but when human beings that are normally integral participants in bond markets are out of the office, things change.  And said human beings have certainly already begun the holiday exodus. That means 2014 is effectively over, and the rest of the movement we see in MBS Prices will not necessarily be indicative of reality or offer any hints about the first trends of 2015. 

Today could have gone either way, and it happened to be good.  A rally was the less eventful conclusion to this week, given the relatively sharp selling over the past 2 days.  In other words, it acts to consolidate the recent range, rather than extend a counter-trend move.

If I was to try to draw connections between things that were happening in the world and today's bond market movements, I might first point to overnight strength in European bond markets.  This week's sell-off began as soon as Europe looked like it was reversing course (before FOMC).  The fact that European bond yields held their ground this morning despite strong data in Germany was probably reassuring to US bond markets.  The afternoon was anchored by the release of the Treasury index (preliminary estimates) that informs "month-end" buying.  As such, with the holiday upon us, it's not unfair to suspect some early month-end positioning. 


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
101-05 : +0-10
FNMA 3.5
104-06 : +0-07
FNMA 4.0
106-18 : +0-04
Treasuries
2 YR
0.6420 : +0.0090
10 YR
2.1600 : -0.0475
30 YR
2.7520 : -0.0660
Pricing as of 12/19/14 4:27PMEST

Today's Reprice Alerts and Updates
A recap of Alerts and Updates provided to MBS Live subscribers.
9:18AM  :  Bond Markets Reluctantly Follow Europe Into Positive Territory

MBS Live Chat Highlights
A recap of featured comments from the Live Discussion on the MBS Live Dashboard.
Matthew Graham  :  "RTRS - WILLIAMS: STILL-WEAK HOUSING MARKET IS ONE REASON FED NEEDS TO KEEP MONETARY POLICY EASY"
Matthew Graham  :  "Oh I think I understand why. Seems pretty simple. Greed and retrenchment. stocks and bond prices saw inflation. capital gains. corporate balance sheets. "
Sung Kim  :  "how can they not be sure about why? inflation has been tempered because the world capacity to produce goods are now interconnected, we import deflation"
Andrew Horowitz  :  "all the books say it should be happening this way, we don't understand and are unable to read outside boxes"
Matthew Graham  :  ""we WOULD expect this, but it's not happening and we're not sure why.""
Matthew Graham  :  "hence the "would""
Matthew Graham  :  "just reading from the script"
Sung Kim  :  "we have been creating 200k min. per month and inflation is no where to be seen, is this guy smoking something?"
Christopher Stevens  :  "I like the move headed out of the week"
Matthew Graham  :  "RTRS- FED'S WILLIAMS: AS UNEMPLOYMENT COMES DOWN, WE WOULD EXPECT INFLATION TO MOVE BACK TO TARGET"
Matthew Graham  :  "RTRS- WILLIAMS: MARKETS VIEWS OF WHEN LIFT-OFF MIGHT OCCUR ARE 'RELATIVELY REASONABLE'"
Matthew Graham  :  "RTRS - FED'S WILLIAMS: 'PATIENT' PLEDGE A BRIDGE TO A TIME WHEN CLOSER TO RAISING RATES BLOOMBERG RADIO INTERVIEW"
Tom Schwab  :  "TR, with rates at 18 month lows it is squirrel time, there are nuts everywhere I look. I only have to think back to 1Q 2014 for motivation. That was cricket time, until the crickets left too"