This email was sent to you by:
Anonymous |
|
Mortgage News Daily
|
Message: YOUR MESSAGE HERE |
Email alerts, such as this one, are a
free service provided by Mortgage News Daily. If you would like to receive an alert when important news breaks please
register to join our community.
Register with Mortgage News Daily - Registration is free and offers many benefits.
Manage your Email Alerts - Once you're registered, you can manage all MND email alerts on one page, turning subscriptions on or off with one click.
About MND:
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.Long Bond Struggles to Attract Buyside Demand. Dealers Saturated with Inventory
Treasury just auctioned $13 billion 30 year bonds. Although the first two auctions of the week were non-events, this reopening did not go smoothly...
Demand as measured by the bid to cover ratio was 2.73 bids submitted for every 1 accepted by Treasury. This is just below average but the lowest BTC in the last four auctions. The auction stopped out at high yield of 2.82%, which is 2.7bps above the 1pm "When Issued" yield. This implies the Treasury had a hard time finding willing buyers at current market yields....which explains why primary dealers got stuck with their largest takedown since last October! The street absorbed 55.6% of the auction. That is 10% more than average. Slopdog..
Directs were almost absent, taking down a meager 8.2% of the issue and only 34.6% of what they bid on, this is the weakest turnout from directs since January, and both metrics are below average.
Indirect bidding was average at 36.1% of the competitive bid. Indirects did take home 69.4% of what they bid on though, so it looks like they were willing to buy, but only at higher yields, which once again explains why the high-yield tailed the WI bid by almost 3bps.
While traders tried their hardest to cheapen up this issue over the past two days, this was still the third lowest "high-yield" on record for a long bond auction and not enough yield to wet the appetite of return hungry investors. With the bond market starting to shy away from longer duration debt investments (extension risk)...perhaps this weak auction is a sign of a potential shift in the market's bias toward risk? As in, money managers feel they can earn a greater return (seeking alpha!) on their investment by allocating funds into an alternate investments. Loaning the government $$$ for 30 years at 3.82% sounds horrible to me...
Market Reaction...
10s hit new session yield highs after bouncing off my Fibonacci Fan. The 2.625% coupon bearing 10 year note is -0-27 at 98-29 yielding 2.752% (+9.6bps). If real money buyers are gonna swoop in to "buy the dips", now would be a good time to stop the bleeding. A break of the high yield we saw last Friday would be a bearish development for the bond market.
[Image or graph removed from email. View full article with images]
FNCL 4.0 prices fall further, to new session lows. The FNCL 4.0 is -0-12 at 102-09. Rate sheet influential MBS coupons aren't just following TSYs lower, they're experiencing some localized weakness thanks to a rush of supply/selling.
[Image or graph removed from email. View full article with images]
Reprice risk is still minimal, but if 10s break 2.75% support, the flood gates could open. If we're playing the range until the range plays us, we need to see a bounce soon!
More from MND:
If you would like to opt-out of receiving email forwards from this person please click here to remove your email address.
This email was sent to you by:
|
Mortgage News Daily
|
 |
Anonymous Anonymous |
|
Message:
YOUR MESSAGE HERE
Long Bond Struggles to Attract Buyside Demand. Dealers Saturated with Inventory
Treasury just auctioned $13 billion 30 year bonds. Although the first two auctions of the week were non-events, this reopening did not go smoothly...
Demand as measured by the bid to cover ratio was 2.73 bids submitted for every 1 accepted by Treasury. This is just below average but the lowest BTC in the last four auctions. The auction stopped out at high yield of 2.82%, which is 2.7bps above the 1pm "When Issued" yield. This implies the Treasury had a hard time finding willing buyers at current market yields....which explains why primary dealers got stuck with their largest takedown since last October! The street absorbed 55.6% of the auction. That is 10% more than average. Slopdog..
Directs were almost absent, taking down a meager 8.2% of the issue and only 34.6% of what they bid on, this is the weakest turnout from directs since January, and both metrics are below average.
Indirect bidding was average at 36.1% of the competitive bid. Indirects did take home 69.4% of what they bid on though, so it looks like they were willing to buy, but only at higher yields, which once again explains why the high-yield tailed the WI bid by almost 3bps.
While traders tried their hardest to cheapen up this issue over the past two days, this was still the third lowest "high-yield" on record for a long bond auction and not enough yield to wet the appetite of return hungry investors. With the bond market starting to shy away from longer duration debt investments (extension risk)...perhaps this weak auction is a sign of a potential shift in the market's bias toward risk? As in, money managers feel they can earn a greater return (seeking alpha!) on their investment by allocating funds into an alternate investments. Loaning the government $$$ for 30 years at 3.82% sounds horrible to me...
Market Reaction...
10s hit new session yield highs after bouncing off my Fibonacci Fan. The 2.625% coupon bearing 10 year note is -0-27 at 98-29 yielding 2.752% (+9.6bps). If real money buyers are gonna swoop in to "buy the dips", now would be a good time to stop the bleeding. A break of the high yield we saw last Friday would be a bearish development for the bond market.
FNCL 4.0 prices fall further, to new session lows. The FNCL 4.0 is -0-12 at 102-09. Rate sheet influential MBS coupons aren't just following TSYs lower, they're experiencing some localized weakness thanks to a rush of supply/selling.
Reprice risk is still minimal, but if 10s break 2.75% support, the flood gates could open. If we're playing the range until the range plays us, we need to see a bounce soon!
If you would like to opt-out of receiving email forwards from this person please click here to remove your email address.