Mortgage bond markets are signaling a slight return to risk this morning.  If you're watching the wrong market indicators, though, you probably didn't get the memo.

Looking at the chart above, we see that as of 9:02 AM ET:

• Mortgage-backed securities are improved by 28 basis points
• 10-year U.S. treasury notes are off by 106 basis points

This tells us that mortgage markets and treasury markets are moving in opposite directions.  It also tell us that mortgage rates are improved today. 

The chart counters the popular notion falsehood that 10-year treasuries are a good proxy for the mortgage market.  They're not.  Long-term, maybe.  But on a day-to-day basis -- no way.  This is because investors continue to treat the debt types differently even though the government nationalized the mortgage market six weeks ago.

That's kind of a big deal because, in theory, U.S. treasuries notes and mortgage-backed securities should behave the same.  In practice, however, they don't.

Investors still place risk premiums on mortgage-backed money and that prevents treasuries yields and mortgage rates from moving in lockstep.  The risk premium prevents the theory that 10-year treasuries can be used to predict mortgage rates from ever being true.

Last week offered a terrific, in-the-wild example.

For the first few days of the week, as stock market money headed for the exits, it flowed equally to treasury and mortgage-backed markets.  Rates on both types of debt improved. 

By the end of the week, however, fear had gripped the markets so tightly that money flowed into treasuries almost exclusively.  The assumption was that treasuries were a less risky market.

Mortgage rates got hammered as a result. 

If the risk in treasuries was truly equivalent to the risk in mortgage-backed markets, this separation would never have occurred.

So, today, what we're seeing is money is un-parking itself from the relative safety of U.S. treasuries, flowing back into stocks and mortgage markets.  This is helping to edge rates lower even as U.S. treasury yields rise.