Bond Markets Slip After Tepid 5yr Auction; Bouncing Back Already
Though it's not the exclusive driver of momentum this afternoon, a lackluster 5yr Note auction did give way to a moderate amount of weakness though bond markets were already coming off their highs heading into the noon hour.
The auction itself wasn't terrible when viewed against longer-term historical averages, but compared to the only 2 examples of the 5yr auction falling within the time-frame of the current range (February and March), it left much to be desired.
As is typically the case for MBS and 10yr yields when it comes to the 5yr auction, there wasn't a big reaction. It simply cast another vote for a mild correction that was already underway. On a positive note, it gave MBS a chance to stay sideways long enough for lenders to offer positive reprices.
Additionally, in the past few minutes, the weakness looks like the exception rather than the rule. 10yr yields bounced nicely just before hitting 2.70. MBS similarly held firm at this morning's pivot point 104-08, currently up 6 ticks on the day (same as last update) at 104-09.