For all the possibilities, today ended up being both surprising and straightforward for bond markets. The surprise was that Ukraine headlines turned out to be the biggest market mover as they introduced a new level of physical violence and heightened risk of civil war. In quintessential “flight-to-safety” fashion, stock prices and bond yields fell in almost perfect unison. All told, it was enough to bring bond markets into positive territory after starting the day in the red.
As the headlines stopped coming, and after the European session closed, domestic markets turned around and unwound a good amount of the “risk-off” movement. Stocks ended up making it all the way back to morning highs while bond markets only gave up about half their gains.
Heading into the end of the day, we still have just over an eighth of a point in positivity left in MBS, but considering yesterday’s prices trailed off before the close, we’re actually more in line with yesterday’s predominant afternoon prices (as opposed to being 4/32nds better). Rate sheets generally reflect the same as they’re unchanged on average. Some of the lenders that repriced into the rally ended up coming back for a negative reprice with the afternoon correction.