It's as if traders are surprised to hear things they already know. Bonds were sold in the highest volumes of the day just now when Yellen said she expects a rise in long-term rates as the Fed reduces the size of its balance sheet.
This is common sense--especially for traders and markets, but for some reason, it struck a chord with a few traders.
10yr yields are now up 3.4bps to the highs of the day (2.353) and Fannie 3.5 MBS are down an eighth of a point at 102-17. It's a bit early for most lenders to consider negative reprices, but they can't be ruled out among a select few of the jumpiest lenders.
