Bond markets continued to heal after dodging a few of the same old bullets from FOMC Minutes. This time around, ongoing QE expectations were called into question by some FOMC members' contentions that QE3 might have to be ended before labor markets realize the stated goal of a "substantial recovery." This sent MBS and Treasuries close to their weakest levels of the day, but both were able to avoid breaking through (thereby also rejecting recent lows from 2/14--both good technical developments).

Volume began to ebb for bond markets after the second pop of selling failed to challenge the first. At that point, equities markets got involved in a big way with S&P's proceeding to slide to their worst loss since mid November. Perhaps this loses a bit of it's bite considering that yesterday was the highest close in more than 5 years or that current levels would still make for the highest monthly close in 5 years, but it helped bond markets just the same. 10yr Yields are down to 2.0104 after the official 3pm close and Fannie 3.0s ended their day just 1 tick into the green at 102-26, prompting just a few lenders to offer token reprices.

That said, it doesn't seem like it's yet time to be complacent and comfortable with respect to longer term "bouncing" possibilities with 10's still over the important pivot point at 1.998 and with MBS not even moving to challenge it's own longer-term pivot at 103-00. While we do see good support in terms of 10yr yields at 2.04, the resistance at 1.998 is equally ominous, as is the fact that this massive sell-off in equities has gotten us nowhere near testing important bond market milestones.

Remember - The Market Is Your Friend.... -- And So Am I -- Stay Close Friend!

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