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Mortgage News Daily combines the expertise of some of the housing industry's leading minds with the power of social media to offer an always lively, constantly evolving web community. MND communicates breaking news, streams video, and provides expert opinion and commentary to a community of interested market professionals and curious consumers.MBS LUNCH: 30 Year Bond Auction Results and Reactions
The previously discussed auction concession must have been sufficient because the long bond auction went very well. Overall, auction demand was well above average---2.89 bids were submitted for every one accepted by the Treasury. 82% of the auction was taken down at the high yield of 4.679% (dealer bids).
I should share the auction caveat before going any further....success was driven by a hungry bid from from direct buyers who took home a record 29.5% of the issue. This massive support offset a very weak turnout from Indirect bidders, who were awarded only 23.9%. Primary dealers got 46.4% of the $13 billion...below average
Here is a recap of the results:
29-YEAR 11-MONTH BONDS
YIELDS
High 4.679 pct
Median 4.645 pct
Low 4.580 pct
PRICE/ACCEPTANCES
Price 99.128159
Accepted at high 82.80 pct
Bid-to-cover ratio 2.89
AMOUNTS TENDERED AND ACCEPTED (dollars)
Total accepted 13,000,003,100
Total public bids tendered 37,616,887,100
Competitive bids accepted 12,978,916,000
Noncompetitive bids accepted 21,087,100
Fed add-ons 153,804,000
Primary Dealer Tendered 24,033,200,000
Primary Dealer Accepted 6,026,600,000
Primary Dealer Hit Rate 25.1% of their bid
Primary Dealer Total Award 46.4% of issuance
Direct Bidder Tendered 6,576,000,000
Direct Bidder Accepted 3,848,000,000
Direct Bidder Hit Rate 58.5% of their bid
Direct Bidder Total Award 29.6% of issuance
Indirect Bidder Tendered 6,986,600,000
Indirect Bidder Accepted 3,104,316,000
Indirect Bidder Hit Rate 44.4% of their bid
Indirect Bidder Total Award 23.9% of issuance
The 10 yr note's initial reaction was a sharp decline in yields, a new intraday low was established. However that positive progress soon faded and yields are now moving back toward a test of the 38% retracement level at 3.734%.
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This choppiness in the basis led "rate sheet influential" MBS prices to new intraday highs and then quickly back to pre-auction price levels. The FN 4.5 is back in its sideways channel....-0-02 at 100-29.
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I am sticking to our speculative theory. There was a decent volume spike at the two day10 yr futures contract price lows which only lasted as long as it took for prices to reach the top layer of "positional resistance". Once the market can muster the strength to take out that "positional resistance" ...there will be more room for futures prices to push higher and cash market 10 year yields to run lower. Watching and waiting...
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MBS LUNCH: 30 Year Bond Auction Results and Reactions
The previously discussed auction concession must have been sufficient because the long bond auction went very well. Overall, auction demand was well above average---2.89 bids were submitted for every one accepted by the Treasury. 82% of the auction was taken down at the high yield of 4.679% (dealer bids).
I should share the auction caveat before going any further....success was driven by a hungry bid from from direct buyers who took home a record 29.5% of the issue. This massive support offset a very weak turnout from Indirect bidders, who were awarded only 23.9%. Primary dealers got 46.4% of the $13 billion...below average
Here is a recap of the results:
29-YEAR 11-MONTH BONDS
YIELDS
High 4.679 pct
Median 4.645 pct
Low 4.580 pct
PRICE/ACCEPTANCES
Price 99.128159
Accepted at high 82.80 pct
Bid-to-cover ratio 2.89
AMOUNTS TENDERED AND ACCEPTED (dollars)
Total accepted 13,000,003,100
Total public bids tendered 37,616,887,100
Competitive bids accepted 12,978,916,000
Noncompetitive bids accepted 21,087,100
Fed add-ons 153,804,000
Primary Dealer Tendered 24,033,200,000
Primary Dealer Accepted 6,026,600,000
Primary Dealer Hit Rate 25.1% of their bid
Primary Dealer Total Award 46.4% of issuance
Direct Bidder Tendered 6,576,000,000
Direct Bidder Accepted 3,848,000,000
Direct Bidder Hit Rate 58.5% of their bid
Direct Bidder Total Award 29.6% of issuance
Indirect Bidder Tendered 6,986,600,000
Indirect Bidder Accepted 3,104,316,000
Indirect Bidder Hit Rate 44.4% of their bid
Indirect Bidder Total Award 23.9% of issuance
The 10 yr note's initial reaction was a sharp decline in yields, a new intraday low was established. However that positive progress soon faded and yields are now moving back toward a test of the 38% retracement level at 3.734%.
This choppiness in the basis led "rate sheet influential" MBS prices to new intraday highs and then quickly back to pre-auction price levels. The FN 4.5 is back in its sideways channel....-0-02 at 100-29.
I am sticking to our speculative theory. There was a decent volume spike at the two day10 yr futures contract price lows which only lasted as long as it took for prices to reach the top layer of "positional resistance". Once the market can muster the strength to take out that "positional resistance" ...there will be more room for futures prices to push higher and cash market 10 year yields to run lower. Watching and waiting...
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