We've talked a lot about 'repricing Fed rate hike expectations' of late, and the fact that this repricing has been accomplished via the recent sell-off. 

The question becomes: how much of a sell-off does it take before the repricing is complete? Good question! There are a few ways we could try to extrapolate that, but ultimately we can't truly know until we see the first solid move back in a friendlier direction.  Even then, we'll have to be wary about the possibility that such moves would only be temporary consolidations amid a broader trend.

In terms of 10yr yields, we could say the baseline sell-off target over the next 2 weeks is 2.40-ish, with 2.47-ish being the worst case and current levels being the best case.  Now, I'm using terms like "best" and "worst" case to refer to various scenarios, but history definitely argues for a wider spectrum of possibilities.  Such scenarios are far less common, and I'd be genuinely surprised so see 10's run above 2.47 by the end of next week.  For a point of reference, the last time 10yr yields moved from 2.10 to 2.36 this quickly following Fed revelations, I wasn't at all surprised to see the follow-through take us above 2.5.  In fact, I had been shouting from the rooftops (perhaps a bit too much) throughout May and June 2013.

I'm not feeling quite as shouty now that we've gotten the first major revelation out of the way.  In many minds, it was actually out of the way at the October FOMC meeting.  If you're like me, you read that as clear confirmation that the Fed wanted to hike in September, just barely held off, and now was even more intent on hiking in December.  Anyone who wasn't convinced by the announcement itself, or Yellen's congressional testimony a week later, is now finally on board with the latest NFP.

Yet despite all that ideological brow-beating, and despite the glut of corporate issuance on a holiday-shortened week with a full round of Treasury auctions, 10yr yields haven't even make it to 2.40 yet.  That could mean we're beginning to get an answer to our question about how much 'repricing' of Fed expectations is necessary.  That's the optimistic stance anyway.  I'm not sure if it's warranted.  Again, I would be surprised to see us break 2.47 by next week, but I wouldn't be surprised by moving quickly into the vicinity.  The point is that there is room for optimism, but not at the expense of lowering your defenses.

A few points of order:

Keep in mind that today is the roll day for Fannie and Freddie 30yr MBS.  That means prices are based on December coupons, which were 13 ticks cheaper than November prices at the close yesterday.  As such, it looks like MBS prices dropped 13 ticks overnight.  They didn't.  We just switched our point of view from Nov to Dec coupons. 

Remember that tomorrow is Veterans Day and bond markets will be closed.  Any lenders who put out rate sheets will be doing so without any eye toward MBS prices (because no MBS trading will be happening).