Fast money is in selling bonds, notes, and mortgage backs as stocks opened down 100 but have cut their losses to less than half that mark.  Currently, the 10 year note is off 5/32’s but mortgage backs are taking a beating, down 16/32’s.  Spreads are certainly widening and with most fixed income products in extreme overbought conditions, the expected consolidation we talked about yesterday is in play.  Bottom line, bonds look expensive, pricing in a ton of bad news.  That has led traders to hit the cash register, selling in size.

Stocks visiting good support and bouncing have added pressure to the fixed income complex as well.  Bigger picture does not support a move to higher Austin interest rates, just one that adjusts value to a more neutral level.  Careful out there as volatility is high and nerves are frayed.  Watch the 30 year bond auction today (12:00 cst).  Participation will be key to near term interest rate direction.  We’ll report the tale of the tape once it’s out.  Meanwhile, keep both hands on the wheel, Austin borrowers!