• Stocks and oil still questionable as primary motivators for bonds
  • European bonds and Treasuries suffered a tradeflow/technical reversal
  • Stocks and oil definitely didn't help
  • intermediate range is still intact, but trend is under attack

Bond markets have been increasingly looking like they had run out of steam after yields bottomed out last Thursday.  It's not uncommon for big moves like that to "flush out" trading positions.  Sometimes referred to as a 'short squeeze,' this dynamic involves traders who were betting on rates moving higher after April 5th's lows could subsequently being forced to cover those bets as rates improved on Thursday.  

Yesterday's sharper spike in European bond yields served as a warning shot, of sorts, but it wasn't too alarming considering 10yr domestic yields remained under the 1.755% pivot point.  Slightly more alarming was the fact that the positive momentum indicators were starting to roll over.  Today's weakness continues that process, though it still hasn't confirmed the end of the more conservative downtrends in rates.

To be clear though, the more aggressive downtrend is definitely under attack, and any further weakness tomorrow will confirm the risk of a bigger-picture shift.  

In terms of today's specific motivations, it's really those technical and tradeflow-based considerations that moved bond markets as much as anything.  Even before we talk about stocks and oil prices spiking (stocks and oil spiked, by the way), we should first remember that there is a lot of "supply" (new debt) coming to the table this week, both from corporations and governments.  Because of that, the next few days could easily end up being a head-fake back toward higher rates, and we may not know for sure until next week.


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
102-17 : -0-07
Treasuries
10 YR
1.7760 : +0.0520
Pricing as of 4/12/16 5:38PMEST

Today's Reprice Alerts and Updates
A recap of Alerts and Updates provided to MBS Live subscribers.
12:22PM  :  ALERT ISSUED: Negative Reprices Increasingly Likely
11:32AM  :  ALERT ISSUED: Bonds at Weakest Levels; Not Quite at 'Reprice Risk' Levels Though
10:23AM  :  Europe and Stocks Hurt Bonds. Is it Over?

MBS Live Chat Highlights
A recap of featured comments from the Live Discussion on the MBS Live Dashboard.
Matthew Graham  :  "3yr Auction was decent. Slightly lower yield than expected, but slightly lower demand as well. Strong indirect bidding (can indicate foreign purchases, but imperfectly). All in all, a non-event for 10's and MBS, which is typical of 2 and 3yr auctions these days."
Matthew Graham  :  "1.80 then 1.84, IMO, SV"
Scott Valins  :  "are we still looking at 1.82 as a threshold?"