From time to time, the best way to recap market events through mid-day will be to revisit things that have already been written.  Here's the first: Monday morning's commentary.

That serves as a set up for today.  Here's the morning update that MBS Live members will have already seen:

MBS LIVE UPDATE  9:24AM Bond Markets Extend Losses; This isn't Really About the Fed

The Fed is getting all sorts of credit for moving risk markets higher (that means "rates" too, unfortunately).  That's fairly silly.  As noted in the Day Ahead, we didn't hear anything new, and certainly nothing that changed anyone's rate hike timeline.  The new word "patient" is getting credit for being dovish?  The evidence is supposedly the fact that 2yr yields are only up 3bps while 7s through 30s are up around 8 bps. 

While that logic does actually make sense, it would also make sense for the yield curve to be steepening simply due to a technical bounce that was long overdue.  In fact, we've discussed that risk several times this week and continually marveled at the fact the rally found more fuel to continue when it didn't seem like it should.

What I'm saying is that the Fed was at the right place at the right time to get credit for a broad-scale market reversal that had nothing to do with them.  Tuesday was the day when things bounced.  A boatload of European data overnight was positive enough to create a tone of volatility and put a floor under Bund yields and a ceiling on Euros. 

Here's a chart that makes it pretty obvious where the action is happening (NOTE: Euros are inverted, in order to line up with the other components.  So the higher the green line is, the weaker the Euro)

And that's why we've bounced.  We bounced on Tuesday, really.  And the Fed just gave markets the collegial, platonic, smack on the backside as they ran past.  "Go get em!  We got nothing to add!"

Jobless Claims probably aren't helping this morning as this week's version coincides with the "survey week" for next month's NFP release.