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Support Still Holding, but Weakness a Bigger Threat
Posted to: Micro News
Wednesday, August 28, 2013 11:55 AM
Technically speaking, Treasury yields haven't yet broken above their supportive ceiling for the day just over 2.77 in 10yr's. MBS are mirroring and matching the supportive overtones with their own ground-holding at 103-05 to 103-06 at the moment. That said, it makes more sense to be on guard against further weakness than it does to hope for more ground-holding.
The 5yr Auction is coming up at 1pm and there's always a chance we'll see additional hesitation heading into that, which can manifest itself as slight additional weakness across the curve--even leaking into MBS. Stay on guard for a break to the other side of either technical level mentioned above (below 103-05 in Fannie 4.0s or above 2.772 in 10yr yields) as an early indicator of swelling reprice risk.
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