MBS RECAP: Reasons For Both Hope and Caution
Today’s 10yr auction was average, but that performance followed a mid-day bond rally. In other words, the auction likely would have been stronger if not for that rally. On one hand, it’s encouraging to continue holding ground without a new, abrupt sell-off so far this week. On the other hand, we really need to see a stronger commitment to rally before getting too hopeful.
Econ Data / Events
Fed MBS Buying 10am, 1130am, 1pm
Core CPI (y/y) 1.3 vs 1.4 f’cast, 1.4 prev
Market Movement Recap
Weaker overnight, with Treasuries following European yields higher. Nice little jolt of gains after the weaker CPI data, but that’s mostly unwound now. 10yr yields up 2.3bps at 1.55% and 2.5 UMBS down just over an eighth at 103-06 (103.19).
MBS have been mostly flat all morning while Treasuries rallied modestly into the 9:30am NYSE open. A bit of a weaker bounce since then. 2.5 coupons at lowest liquid levels of the day, down 6 ticks (.19) at 103-05 (103.16). 10yr back up to 1.550% after being as low as 1.533%
Decent 10yr auction. See the update for more. Intraday gains mostly holding. 10yr down 1bp at 1.52% and UMBS 2.5 within 1 tick of turning green.
Not bad, not stellar. Rally stalled a bit and 10yr yields backed up to roughly unchanged levels for the 3pm CME close. MBS just barely weaker on the day. Pretty uneventful considering the possibilities.
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