It's always a bit disheartening when the day after an awesome rally ends up erasing a good-sized chunk of the gains.  That was the case today as the close of European markets once again coincided with domestic weakness.  The sharper moves were certainly in Europe, both in stocks and bonds, heading into the noon hour, but it was an important rush of weakness for US markets as well.  Reason being: it pushed 10yr yields over 1.95%, a technical level that--once broken--prompted additional selling pressure.

In qualitative terms, 1.95 was like a line between being able to say that bonds were "mostly holding yesterday's gains" being forced to say that bonds had "erased some of yesterday's gains."  Notably, the adjective for the second option is "some" as opposed to "most." 

All that having been said, if we take just a few steps back to look at how things are evolving in the bigger picture, it may not be the end of the world.  The question came up several times on MBS Live today: "was yesterday a head fake?"  At the very least, I'd say that's a premature conclusion.  In fact, as of now, it's still more likely that today's correction is the head fake if, for no other reason, than the longer term trend was in no way challenged by this weakness.  Far from it.  It's actually easier to make the case that today solidified the long term trend.  After all, we can still say 10's broke through all 3 moving averages this week and closed below them today.

2015-3-19 today

For what it's worth, if you haven't seen it yet today, the Day Ahead was written for the express purpose of preparing for exactly the sort of half-hearted pull-back we saw today.


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
101-29 : -0-09
FNMA 3.5
104-23 : -0-09
FNMA 4.0
106-20 : -0-06
Treasuries
2 YR
0.6170 : +0.0600
10 YR
1.9740 : +0.0560
30 YR
2.5300 : +0.0210
Pricing as of 3/19/15 4:17PMEST

Today's Reprice Alerts and Updates
A recap of Alerts and Updates provided to MBS Live subscribers.
12:52PM  :  ALERT ISSUED: If You Haven't Seen a Reprice Yet, You Probably Will
12:01PM  :  ALERT ISSUED: Slightly More Negative Reprice Risk Now
11:29AM  :  ALERT ISSUED: Slight Increase in Negative Reprice Risk for Some Lenders
9:43AM  :  Quiet Morning; Technical Levels Holding Despite Modest Pull-Back

MBS Live Chat Highlights
A recap of featured comments from the Live Discussion on the MBS Live Dashboard.
Matthew Graham  :  "I definitely hate those last 3 hours though!"
Matthew Graham  :  "Well, we never can know for sure, but I do know if we step back and look at more than just the past 3 hours, things still look solid."
Kent Taylor  :  "hope so"
Matthew Graham  :  "I'm almost ready to call today a knee jerk"
Matthew Graham  :  "Two days ago, 10yr yields ended the day around 2.05 and they're currently at 1.97, trading under 2.0 for the first time since late February."
Kent Taylor  :  "almost ready to call yesterday a knee jerk?"
Barry Moore  :  "4155.1 3.B.1.e"
Barry Moore  :  "If the property was acquired less than one year before the loan application, and is not already FHA-insured, the original sales price of the property must be considered in determining the maximum mortgage, in addition to the calculations described previously in this topic."
Tom Sawyer  :  "For any FHA experts out there... If you refi within a year do you have to use the value at time of purchase on a standard FHA refi?"
Ted Rood  :  "reprice before they price? Talk about pro-active."
Steve Chizmadia  :  "I'm still waiting on my initial rates for the day unfortunately. "
Nathan Miller  :  "i know it was better in Jan but it's been a while..."
Nathan Miller  :  "heaven forbid we get to enjoy 2015's best pricing for 1 day haha"
Caroline Roy  :  "man, the reprices seem a bit overdone. Chase was like .4"
Matt Hodges  :  "CR - it's stupid - we didn't get the gains yesterday, that the lenders are taking away today"