Here is the quickest and dirtiest way to look at bond movements over the past few days, in bullet points:

  • This month's ECB shocker (12/3) deflected trading levels in bond markets from what would otherwise have been a more stable course leading up to the Fed.
  • Bonds were back in line with that stable course by last week and then got deflected again by a combination of oil prices and some anxiety over high-yield bond funds.  Those were only part of the pain, and required the help of the snowball rally (short-covering) to achieve maximum potential.
  • This week, thus far, has been a reaction to the end of last week, with bonds attempting to get back to that "stable course."
  • Due to generally poor liquidity, entrenched pre-Fed positions, and a bounce in oil and stocks, bonds have now overshot that "stable course" by just a bit. 

Actually, that's about all there is to it.

We could talk about this morning's CPI coming in in-line with forecasts, but traders treated it more as a hurdle to get past before proceeding with their regularly scheduled programming.  In today's case, that was the Chicago crowd waiting to get back in line with overnight selling in European bonds and rallies in oil and stocks.

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
99-23 : -0-06
FNMA 3.5
102-29 : -0-04
FNMA 4.0
105-18 : -0-03
Treasuries
2 YR
0.9680 : +0.0200
10 YR
2.2690 : +0.0438
30 YR
3.0000 : +0.0440
Pricing as of 12/15/15 1:33PMEST
Morning Reprice Alerts and Updates
A recap of Alerts and Updates provided to MBS Live subscribers.
9:17AM  :  ALERT ISSUED: Bonds Bleed After Morning Data, but Not Because of It
Live Chat Featured Comments
A recap of featured comments from the Live Discussion on the MBS Live Dashboard.
Matthew Graham  :  "they've already flashed their cards as far as I'm concerned. Dot trajectory will continue to flatten."
Hugh W. Page  :  "So many wild cards in 2016. I'm interested in the Fed's guidance and the "dots" and where the bias points to. Is it, we think the economy can handle rate hikes and this is the start of successive moves or is it, we need to start this and see where the data takes us and we're going to be really really patient? If it's the former I think we get a pretty bad market reaction. If the latter, we may even rally on the long end."
Matthew Graham  :  "RTRS - EMPIRE STATE EMPLOYMENT INDEX AT LOWEST SINCE JULY 2009"
Matthew Graham  :  "RTRS - EMPIRE STATE BUSINESS CONDITIONS INDEX AT HIGHEST SINCE JULY"
Matthew Graham  :  "RTRS - NY FED'S EMPIRE STATE BUSINESS CONDITIONS INDEX -4.59 IN DECEMBER (CONSENSUS -6.0) VS -10.74 IN NOVEMBER"
Matthew Graham  :  "RTRS - U.S. NOV CPI YEAR-OVER-YEAR +0.5 PCT (CONS +0.4 PCT), EXFOOD/ENERGY +2.0 PCT (CONS +2.0 PCT)"
Matthew Graham  :  "RTRS - U.S. NOV CPI UNCHANGED (+0.0290; CONSENSUS UNCHANGED), EXFOOD/ENERGY +0.2 PCT (+0.1793; CONS +0.2 PCT)"
John Tassios  :  "MG, excellent Day Ahead. I still believe longer ended TSY's / MBS will have safety trade rally year end and into first half of 2016 even with FED hike coming. The past few weeks selloff in the junk bonds / lower grade bonds could cause contagion risk due to illiquid markets. Banks, and investment banks are pretty much caged in per regulations from providing liquidity, and 3rd party counter trades dry up due to lack of liquidity. At same time, FED is raising and tightening policy thus increasing spreads and reducing liquidity even more. This FED raise comes with econ backdrop of crashing commodities, lack of demand growth, falling inflation. I know FED will raise on Wed, at this point more disastrous to NOT raise. But, I still hold my opinion this will be repeat of FED 1937 mistake all over again. Just my opinion and not that of MBS Live.."