• Big rally in oil brings stocks back up and keeps pressure on bonds
  • Corporate debt supply also hurt Treasuries specifically, but earlier in the day
  • MBS underperformed as the day progressed, ended down nearly a quarter point
  • Few reprices and rate sheets not far off Friday's

Bond markets had an interesting day, but not in the traditional sense where something interesting happens.  Instead, bonds were very flat, albeit at slightly weaker levels than Friday.  What's interesting is the process of considering why that might be, and whether or not our conclusion would matter.

When it comes to "mattering," market watchers often give more weight to more volume.  With that in mind, Friday's session saw just under 1.6 million 10yr futures contracts (a good proxy for bond market activity).  In contrast, today saw just over 845k, the lowest of the year.  That's a good argument to take everything with a grain of salt, even though bond markets didn't really go anywhere surprising considering the surrounding activity.

The weakness had the look and feel of market movement that could be described with words like "incidental" and "afterthought."  If we want to point the finger at potential underlying motivations beyond simple momentum, we could cite higher oil prices along with a fairly robust day of corporate bond issuance (which puts pressure on bond prices by creating more supply in the market and because Treasuries can be sold as a part of the hedging process).


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
101-28 : -0-07
Treasuries
10 YR
1.9040 : +0.0210
Pricing as of 3/7/16 5:41PMEST

Today's Reprice Alerts and Updates
A recap of Alerts and Updates provided to MBS Live subscribers.
2:06PM  :  ALERT ISSUED: On The Edge of Negative Reprice Risk Territory
9:57AM  :  ALERT ISSUED: Bonds Hit Weakest Levels After NYSE Open

MBS Live Chat Highlights
A recap of featured comments from the Live Discussion on the MBS Live Dashboard.
Matthew Graham  :  "RTRS - BRAINARD NOTES CORE INFLATION HAS INCREASED, BUT SAYS FED SHOULD BE CAREFUL AND PUT A PREMIUM ON "CLEAR EVIDENCE" FED'S 2 PERCENT TARGET WILL BE REACHED"
Matthew Graham  :  "RTRS - BRAINARD SAYS RISKS TO U.S. CONTINUE TO REQUIRE PATIENCE FROM FED IN ANY FUTURE RATE HIKES IN ORDER NOT TO RISK PROGRESS THAT HAS BEEN MADE SINCE THE CRISIS"
Matthew Graham  :  "Apparently not as much as oil traders"
Brian Bockholdt  :  "I need some green!!"
Dio Vannucci  :  "CS, yes, my dad actually has this set-up and it is very strange. Basically, the railroad pension is somewhat tied to the amount of Social Security received. Not sure how exactly to document it though. He still gets a 1099-SSA every year but not sure on the pension docs."
Curt Sandfort  :  "anyone worked with a railroad retiree lately? customer is telling me that Soc Sec is sent to the railroad board, then forwarded to him. The documentation is weird."