The day started out inoffensively enough with MBS and Treasuries only down slightly from Friday’s latest levels. Those were also incidentally the best closing levels of the year for MBS apart from 2 days at the end of May, and well into the best levels for Treasuries. That, perhaps, serves to help temper the frustration that comes from a “down” day.
The moderate opening weakness simply stayed intact all day long. There were no headline motivations during the domestic session, though cases can be made for a few soothing snippets on the Ukraine situation, and slightly stronger Homebuilder confidence.
More than anything, this is just the sort of selling pressure we expect to see when bonds have rallied hard on geopolitics and then the geopolitical headline die down. Fannie 3.5s ended up losing 10 ticks by the end of the day and 10yr yields were up nearly 5bps to 2.394.