Fleeting Gift or Just The Beginning?


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Today ended up being all about the early afternoon “flash crash” in bond yields (from 2.94 to 2.884% in fairly short order).  While they’re not common, these sorts of things do happen from time to time.  The most notable past example in October 2014 was quite a bit bigger than today’s.  It occurred near the stronger edged of a longer-term downtrend in rates and completely obliterated that range–for a few days anyway.  Rates quickly erased all of the gains in the next session and proceeded to move higher for 3 straight weeks.

Today’s version is different enough that we shouldn’t simply point to 2014 and assume the worst.  But at the very least, 2014 lets us know that flash crashes in rates don’t necessarily serve to reveal latent bond buying demand that’s been secretly amassing its strength.  

The bigger considerations for bonds remain in the future.  Next week is important, as it brings CPI data, the Fed, and the ECB (European Central Bank).  It’s the sort of week that could either push rates to new long-term highs or serve to reinforce recent long-term ceilings.  In that light, a bit of jumpiness is understandable this week–even if today’s level of jumpiness may not have been altogether intentional (MBS Live members can read and watch more about this in today’s Huddle and updates).

MBS Pricing Snapshot

Pricing shown below is delayed, please note the timestamp at the bottom. Real time pricing is available via MBS Live.


FNMA 4.0

101-25 : +0-06


10 YR

2.9223 : -0.0527

Pricing as of 6/7/18 5:00PMEST

Today’s Reprice Alerts and Updates

2:31PM  :  More On The Flash Crash in Bond Yields

1:40PM  :  Big Move in Bonds

10:50AM  :  Curve Trading Pulls Bonds Into The Green

MBS Live Chat Highlights

Scott Valins  :  “flash crash was a gift too and these re-prices are a loan”

Ted Rood  :  “well, it’s a loan that’s a gift”

Dave Pressel  :  “Nothing says fun as much as when client is getting a gift for the downpayment and the donor writes “Loan” in the memo section…….”

Matthew Graham  :  “that’s the consensus so far TB”

Timothy Baron  :  “Fat finger? Flash crash?”

Matthew Graham  :  “I’ve never seen a move this big with newswires and twitter this silent on the topic”

Jeff Anderson  :  “Ginormous short covering.”

Matthew Graham  :  “all I see so far is the big trading volume, but a headline should be inbound, I’d wager”

Victor Burek  :  “seeing nothing yet”

Victor Burek  :  “has to be something happening”

Sung Kim  :  “what’s the news?”

Original Source