In financial markets, a flight-to-safety generally refers to investors moving out of riskier assets (like stocks, and certain commodities) and into safer havens (like Treasuries and other virtually risk-free bonds).  The past 4 days have seen a sharp increase in risk aversion on top of a similar move that was already in progress for the past several weeks. 

Today has seen the sun set on that move.  In fact the sun began to set as early as yesterday morning, and the sky has simply continued to darken as global stock markets bounce back.  Quick point of order: if you see headlines about Chinese stock markets falling today, they will be in reference to the Shanghai composite, which closes earlier and is limited in terms of investor participation.  The Hang Seng is much improved on the day, as are most equities indices around the world. 

The price for the stock market gains is being paid by bond markets.  10yr yields are now up nearly 9bps and have yet to show signs of leveling-off for the day.  Domestic economic data didn't have much of an effect, but to whatever extent investors care, it too was a negative indicator for bonds.  Consumer Confidence soared to 101.5 vs a 93.4 forecast.  The only silver lining is the fact that MBS continue to lag the volatile moves in Treasuries.  Yesterday, that was frustrating (MBS didn't gain as nicely), but it's welcome change today (MBS aren't losing as much ground).  Fannie 3.5's are down nearly a quarter point, but still at 104-00.  Yesterday notwithstanding, that's the highest since late May.


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
100-30 : -0-11
FNMA 3.5
104-00 : -0-07
FNMA 4.0
106-15 : -0-03
Treasuries
2 YR
0.6210 : +0.0410
10 YR
2.0990 : +0.0870
30 YR
2.8330 : +0.1000
Pricing as of 8/25/15 11:45AMEST

Morning Reprice Alerts and Updates
A recap of Alerts and Updates provided to MBS Live subscribers.
11:16AM  :  ALERT ISSUED: Negative Reprice Risk Increasing For Some Lenders
9:58AM  :  China Rate Cut Sends Global Markets Back in Other Direction

Live Chat Featured Comments
A recap of featured comments from the Live Discussion on the MBS Live Dashboard.
Matthew Graham  :  "RTRS- DALIO SAYS IN CLIENT REPORT THAT RISKS OF DEFLATIONARY CONTRACTIONS ARE INCREASING RELATIVE TO RISKS OF INFLATIONARY EXPANSION"
Matthew Graham  :  "RTRS- RAY DALIO, FOUNDER OF HEDGE FUND BRIDGEWATER ASSOCIATES, SAYS 'NEXT BIG FED MOVE WILL BE TO EASE VIA QE RATHER THAN TO TIGHTEN'"
Matthew Graham  :  "Brandon asking about yields, I believe. I don't know how long it will take, but there's basically no way that all yields won't eventually be sub 2%. Now, that could take decades, or even a century if we're counting the entire world, but in the case of the US, we could easily see new record lows within 3-4 years."
Justin Harward  :  "I don't think this is the bottom for equities Brandon "
Brandon Blue  :  "In other words, are we currently bouncing on the bottom?"
Sung Kim  :  "this is a pretty weak dead cat bounce after yesterday, still early though"
Sung Kim  :  "looking that way Brent"
Brent Borcherding  :  "Stocks end in red."
Brandon Blue  :  "Being that QE is no longer present in the US market, have any analyst theorized how low the 10yr could possibly trend downward? I believe you had mentioned in on of your past articles that if we still had QE going right now, rates would be closer to 2012 levels. "
joon choi  :  "depending on lender, 1/8 to 1/4 worse pricing"
Sung Kim  :  "anyone see rate sheets yet?"
joon choi  :  "good luck, i think fannie stop trailing spouse income"
Clayton Sandy  :  "Honestly I don't think either will use it. "
Michael Baker  :  "Who is easier for Trailing spouse income? (FNMA/FHLMC)"
Matthew Graham  :  "RTRS- U.S. HOME PRICES +0.2 PCT IN JUNE FROM MAY - U.S. REGULATOR"
Matthew Graham  :  "RTRS- US JUNE HOME PRICES IN 20 METRO AREAS -0.1 PCT SEASONALLY ADJ (CONSENSUS +0.1) VS REVISED -0.1 PCT IN MAY- S&P/CASE-SHILLER"
Matthew Graham  :  "RTRS- US JUNE 20-METRO AREA HOME PRICES +5.0 PCT FROM YEAR AGO (CONSENSUS +5.1 PCT) VS +4.9 PCT IN MAY - CASE-SHILLER"
John Tassios  :  "looks like safety trade coming out of TSY's. Hopefully MBS will lag with this selloff , since they lagged on the way up yesterday."