MBS Outperform as Bonds Aggressively Unwind Weekend Rally

There's been no shortage of directional movement over the past 5 business days with last Wednesday's Fed announcement serving as the starting point for huge rally with a big cast of characters.  Whereas the first 4 days of this wild ride had distinct motivations, today's selling in the bond market was more to do with the absence of any additional motivation.  Bottom line, as of yesterday afternoon, there was some uncertainty as to whether the Yen carry trade had fully unwound and today's trading suggests it is at least far enough unwound to no longer serve as an impetus for massive stock selling and bond buying.  Treasuries took the biggest hit, partly because they outperformed yesterday and partly due to the ongoing auction cycle.