As we've been discussing fairly regularly, bond markets have been consistently dragged to better and better levels so far in the new year, by massive losses in equities markets.  It was only a matter of time before stocks had a flat day or better.  Today was that day--barely.

Stocks weren't even in positive territory for most of the day, nor did they close any higher than they opened, but they did manage to end the day just slightly higher than they ended Friday's session.  The only other time they've done that this year was January 5th which was incidentally the only other time bond markets lost ground this year. 

This time around, bonds were more pent-up after having been dragged to their best levels in more than 2 months by the end of last week.  This, combined with the upcoming glut of supply (Treasury auctions and corporate debt issuance = bond market "supply") made the consequences steeper.  10yr yields rose 6bps.  As usual during sell-offs, MBS fared a bit better, with Fannie 3.0s losing only 7 ticks in price (relative to 17 ticks in price for 10yr Treasuries).

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
100-23 : -0-01
FNMA 3.5
103-23 : +0-00
FNMA 4.0
106-09 : +0-00
Treasuries
2 YR
0.9360 : +-0.0120
10 YR
2.1750 : +0.0440
30 YR
2.9690 : +0.0480
Pricing as of 1/11/16 6:37PMEST
Today's Reprice Alerts and Updates
A recap of Alerts and Updates provided to MBS Live subscribers.
10:32AM  :  Bonds Finally Had Enough (of a Good Thing)
MBS Live Chat Highlights
A recap of featured comments from the Live Discussion on the MBS Live Dashboard.
Matt Hodges  :  "MG's post from 12/15/15: http://www.mortgagenewsdaily.com/consumer_rates/542772.aspx"
Hugh W. Page  :  "I don't believe the Fed can sell MBS ever. Re-investments now soak about just about 100% of issuance if I'm not mistaken and they won't sell any until they first stop re-investing payoffs. Unless loan demand starts to go up substantially they'll put too much supply on the market and push prices ever lower."
Rich Liu  :  "Who's going to buy them given the yields of MBSs they hold?"
Hugh W. Page  :  "And he says "consider" reducing balance sheet. Doesn't mean they will :). And, correct me if I'm wrong MG but balance sheet reduction doesn't mean they sell MBS it just means they stop reinvesting. I bet they don't ever sell any MBS."
Christopher Stevens  :  "Lockhart saying a lot today"
Matthew Graham  :  "RTRS - LOCKHART SAYS FED WILL CONSIDER REDUCING BALANCE SHEET ONLY AFTER IT IS CLEAR THAT NORMALIZATION OF RATES HAS GONE SMOOTHLY AND ECONOMY REMAINS ON SOLID TRAJECTORY"
Timothy Baron  :  "Good time to be a Doritos salesperson."
Chip Harris  :  "Randy, I am in Colorado as well. Crazy market. Has been for over a year now!"
Randy Nederman  :  "Live in Colorado, the housing market here is crazy....bidding wars and housing going over asking price."
Andy Pada, Jr.  :  "i guess lockhart didn't check with the NY Fed's release"
Christopher Stevens  :  "begs he question, what is 'hard evidence'?"
Matthew Graham  :  "RTRS - LOCKHART SAYS INFLATION WILL BY KEY TO PACE OF FURTHER FED RATE HIKES, NEED "HARD EVIDENCE" THAT 2 PCT TARGET WILL BE REACHED"
Matthew Graham  :  "RTRS - ATLANTA FED'S LOCKHART SAYS REST OF WORLD IS NOW CHIEF RISK TO U.S. ECONOMY, BUT SOLID DOMESTIC CONSUMPTION SHOULD BE ADEQUATE FOR CONTINUED GROWTH"