Bonds were horribly weaker yet again overnight, and the same old factors are in play.  These aren't glamorous, satisfying to understand, or easy to explain to colleagues and clients, but that doesn't make them any less relevant.

Chief among them is the tradeflow story.  Here's how I described that in this morning's update on MBS Live:

The frustrating thing about all this from a traditional market-watching perspective is that the biggest motivation for trading is TRADING itself. That's the simplest way to discuss the concept of "tradeflow considerations/motivations. Traders are forced in to new trades when certain levels are hit. Those new forced trades become the price-movers for the next forced trades, and the snowball rolls on.

Treasuries were deposited on the domestic session right in line with 2015's weakest levels.  Same story for MBS, though it would have been a close call if not for the roll (the most current Fannie and Freddie 30yr MBS coupon became June this morning after May coupons were retired yesterday.  Newer coupons have slightly lower prices, because they last 1 month longer than the coupon they're replacing.  That means investors are technically waiting an additional month before getting their principal back, which means they'd pay slightly less for the newer coupon).

The fringe benefit of beginning the day at these weaker levels is that positive reprices have come easy.  28 have been reported so far on MBS Live and more are likely on the way.  Unfortunately, they haven't even gotten us back to yesterday's levels in most cases.


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
100-17 : +0-05
FNMA 3.5
103-29 : +0-06
FNMA 4.0
106-16 : +0-07
Treasuries
2 YR
0.6040 : -0.0160
10 YR
2.2490 : -0.0380
30 YR
3.0060 : -0.0450
Pricing as of 5/12/15 1:28PMEST

Morning Reprice Alerts and Updates
A recap of Alerts and Updates provided to MBS Live subscribers.
10:15AM  :  Bond Markets Hovering Near Unchanged Levels After Big Overnight Sell-Off

Live Chat Featured Comments
A recap of featured comments from the Live Discussion on the MBS Live Dashboard.
Paul Martin  :  "The market can stay irrational longer than you can stay solvent...which is why I play the bond market originating mortgages instead of betting money."
Paul Martin  :  "Ridiculously oversold now and we are due for a bounce....even if it is of the dead cat variety."
Matthew Graham  :  "if yields are rising, that means their plan is working"
Matthew Graham  :  "The ECB wants yields to rise"
Ira Selwin  :  "The roll has no effect on what you are seeing. These are true day over day change"
Sung Kim  :  "Bill - bunds are still below .80%, far lower than the US when we did our massive multiple QEs, unless deflation scares begin to rear it's ugly head again, or substantially weak growth numbers out of euro, its hard to imagine they will trade back down to .05% - thats my opinion"
Frank Hanna  :  "Did we triple roll?"
Bill Hills  :  "MG... to clarify...Does the ECB step in soon (in the coming weeks) and attempt to drive yields back down? If so, are there opps for buyers to scoop up bonds at lower prices ahead of the ECB driving prices up? I am not pretending to know this stuff... leaning on the technical folks to educate me on this. "
Jason Lowe  :  "I only joined about a month ago....because of the monitoring I've been able to do on this site, I have saved myself .125 on 6 loans that have been locked in that timeframe. The dollar amount was 1.2mil. So my $39/month has netted $1500 in income in that timeframe. Not trying to sell anyone on it....just stating a fact."