I was going to leave Tennyson out of the headline and bask in the alliterative glory of an unprecedented 5T title, but I figured you should know there's something wacky and interesting here in case you're into that sort of thing.  If you're not, bonds rallied a lot after more crazy trade war drama, but MBS can't hang.  The end.

For everyone else, read on. 

If you're not familiar with Charge of the Light Brigade, the memorable opening line is "Half a League, half a league."  This was parodied in a Monty Python's Flying Circus episode dedicated to ants (don't overthink it).  Ants are smaller than people, so at a poetry reading of Charge of the Ant Brigade, the opening line was "Half an inch, half an inch."

If mortgage rates were a light brigade at some point in the past, they're an ant brigade now--reduced to measuring their advance in mere inches whereas the glorious battles of yore yielded leagues of improvement.  Such is life when our battle takes us into the valley of Death, which is what I imagine Tennyson used as a reference to super wide MBS spreads in response to a massively unexpected and massively volatile Treasury rally.  Well-known MBS guru, that Tennyson.

Unlike the Light Brigade, soldiers in the trenches of the mortgage market are certainly trying to "reason why" such a discrepancy persists.  In reply, I won't simply spur you onward, telling you yours is but to do and die.  While it is true that you have to work with the rates you have access to, it's your right to know about the vast conspiracy behind this frustration.

The truth is that there is no vast conspiracy.  Days like today utterly and completely suck.  They suck for those who deal in MBS and they suck for lenders charged with generating rate sheets based on those MBS.  They suck so bad that the suck won't stop sucking simply because the source of suck vanishes.  

In other words, if China and Trump never said a thing about the trade relationship again, and if Treasuries held steady at 1.50% for 2 weeks straight, we still would only begin to see the shattered psyche of the mortgage market cautiously poke its head up from the fox hole.  Every. Single. Time. it looks like it's over, WHACK!  Days like today happen.

It might seem great that bonds are green--and indeed, it's still better than bonds being red--but it's not great when they're THIS green, this quickly, and this unexpectedly.