Due primarily to a rather large sell-off in stocks, the good times continue to roll for bonds. Granted, the simple act of hitting long-unseen levels brings some additional technical follow-through as well. In other words, this is a snowball rally where certain levels are achieved which then act as triggers for more buying. That buying pushes yields to new, lower levels that then act as the technical trigger for the next trader in line.
The snowball is occurring primarily in CURVE trading, meaning that 10yr yields are vastly outperforming 2yr yields (30yr bonds are doing even better).
10yr yields are currently down nearly 7bps at 2.897% and Fannie 4.0 MBS are up a scant 5 ticks (.16) at 100-31 (100.97).
