Send Article via Email

Bond markets traded in weaker territory for the entirety of the overnight session with 10's creeping as high as 2.059 after a block trade of 10yr Futures at 4:22am. But a negative earnings surprise from Commerzbank and widening EU peripheral spreads helped German Bunds begin to ratchet to lower yields with Treasuries following reluctantly.

As domestic market participants began trading, block trades arrived on the other side of the table with the biggest 10yr ticket just before 8:20am. That helped extend a "risk-off" trade that was already underway with equities and Treasury yields both moving down relatively briskly into the 8am hour.

MBS are noticeably appreciative of benchmark yields' attempts to hold below Friday's highs with Fannie 3.0s up 9 ticks at 103-14, their session highs. The stock lever has been well connected and post-opening-bell, has given some pause to the morning Treasury/MBS rally. Amid light econ data (just Factory Orders coming up at 10am), further stock/bond connectivity is a strong possibility.

More from MND:

• MBS Commentary: MBS RECAP: Light Volume Stability Falls Victim to Headlines
• Mortgage Rate Watch: Mortgage Rates Slightly Higher; Anticipation Building for Fed
• MBS Commentary: MBS MID-DAY: Eerily Calm Start to FOMC Week
• MND NewsWire: Builder Confidence Soars. Sharpest Rise Since 2002
• Pipeline Press: Eminent Domain; More on Mini Correspondent; Deducting Mortgage Interest; The Popularity of 15-yr Refis

If you would like to opt-out of receiving email forwards from this person please click here to remove your email address.