Bond markets made their move today... The trend of convergence and consolidation on bond markets that we've been tracking and discussing in recent days was finally tested, and in just about the LEAST interesting way possible. Essentially, the "triangle" of lower highs and higher lows was already broken by the time New York got in and we'd guessed last night, or perhaps "suggested" that while the triangle would clearly be broken by today's trading, the only really interesting eventuality would be the subsequent break of one of the significant recent horizontal yield levels, like 1.68 on the high side of the previous June lows. So given that the lower red line in the chart below is the less intense of the two horiztonal levels on the downside, bond markets have essentially done "only what they had to do" and nothing more. Your move world.
MBS Pricing Snapshot
Pricing shown below is delayed, please note the timestamp at the bottom. Real time pricing
is available via MBS Live.
Pricing as of 4:06 PM EST
Afternoon Reprice Alerts and Updates
Below is a recap of instant Reprice Alerts
and updates issued via email and text alert to MBS Live subscribers
Another Dismal Treasury Auction Shrugged Off By Bond Markets
The 7yr Treasury Auction came in 1.705 vs a 1.505 "when-issued" yield at 1pm's auction bid cut-off, making this a moderately large 2bp tail (Treasury Auction Jargon Refresher HERE
if you need it). The bid-to-cover was a low 2.64 compared to a recent of 2.85 and 2012 low of 2.72.
While this does look to be reinforcing the 1.568-ish floor of resistance in Treasuries at the moment, bond markets certainly haven't done what you might expect them to do on the heels of such an auction. Then again, if you were tuned in to yesterday's 5-yr auction, the same thing happened. So maybe it would be fair to have expected a repeat performance, or at least hoped for it.
Whether or not that continues to be the case remains to be seen. So far so good for now as 10's never went higher than 1.59 on the initial knee-jerk response and are currently back down to 1.575. Apart from the shorter term 1.568 floor, there's a more pronounced range of technical resistance around the mid 1.55's. Anything above there is sort of a non-event heading into tomorrow and preserves the sideways range from early June.
On the MBS front, Fannie 3.0's are up 8 ticks on the day, at 102-28 and 3.5's up 7 at 105-10. Both are little changed since 10am and holding narrow ranges right through the post-auction trade. We've already seen a few scattered positive reprices, but more could follow if the general "holding our ground" theme continues unabated.
Live Chat Featured Comments
Bryce Schetselaar : "REPRICE: 2:39 PM - Sierra Pacific Worse"
Tom Schwab : "REPRICE: 1:53 PM - AMC Better"
Justin Bayle : "I really think so"
Brent Borcherding : "We're turning Japanese."
Alan Craft : "It's a different world we live in these days"
Matthew Graham : "buyers showing their hands readily on that one. "
Matthew Graham : "but darned if the initial pull-back wasn't met with buying in TSYs. So far, turning out like y'day again"
Matthew Graham : "go figure"
Victor Burek : "Santelli gave it a D"
Matthew Graham : "yep, let's see how it's traded. not too ugly so far"
Victor Burek : "hope nobody cares like yesterday"
Matthew Graham : "that's another D, maybe worse"
Victor Burek : "yuck"
Matthew Graham : "RTRS- US TREASURY - PRIMARY DEALERS TAKE $14.91 BLN OF 7-YEAR NOTES SALE, INDIRECT $12.17 BLN "
Matthew Graham : "RTRS- U.S. 7-YEAR NOTES BID-TO-COVER RATIO 2.64, NON-COMP BIDS $7.65 MLN "
Matthew Graham : "RTRS- U.S. SELLS $29 BLN 7-YEAR NOTES AT HIGH YIELD 1.075 PCT, AWARDS 54.05 PCT OF BIDS AT HIGH "
Bryce Schetselaar : "MG, is there a way to show the S&P, 10 year and FNMA 3 on advanced charts at the same time?"
Matthew Graham : "1pm when-issued = 1.055"
Matthew Graham : "range 2.72-3.11"
Matthew Graham : "recent average BTC for 7yr auction = 2.85"
LSP : "REPRICE: 12:35 PM - Chase Better"
David Zilkha : "I just don't buy that. If you have demand, you hire. The expenses are of course a consideration, but a small one compared to the demand "
Jeff Anderson : "I hear you, Andy but I've heard a lot of CEO's saying they won't hire until the healthcare was figured out. But I agree that they probably stand pat until the tax issue is resolved also."
Andy Pada : "@Jeff, no one hires unless they have to. Squeeze every dollar out of current resources. Only demand wil spur new hiring."
Matthew Graham : "RTRS - EU LEADERS TO SAY BANKING UNION SHOULD COVER ALL EU COUNTRIES, BUT ALLOW FOR DIFFERENCES BETWEEN EURO AND NON-EURO COUNTRIES - DRAFT SUMMIT CONCLUSIONS "
Matthew Graham : "RTRS- EU LEADERS TO ASK TOP FOUR EU OFFICIALS TO DEVELOP SPECIFIC, TIME-BOUND ROAD MAP FOR GENUINE ECONOMIC AND MONETARY UNION BY YEAR-END, INTERIM REPORT BY OCT - DRAFT SUMMIT CONCLUSIONS "
Jeff Anderson : "So with this uncertainty 'over' do businesses hire? "
Lynn ONeal : "REPRICE: 11:18 AM - USBank Better"
Timothy Baron : "I'm disappointed too Brett (cougar), but I think the decision is actually correct constitutionally. "
Andy Pada : "Wow...Santelli waxing knowledge"
Brett Boyke : "plus $500K cash on cash outs"
Brett Boyke : "USB Broker made some product changes that may be useful - 90% LTV purchases up to $750,000 with no MI
(80% LTV purchases up to $1 million in AZ, CA, FL, MI, & NV)
Brett Bly : "I'm very disappointed in John Roberts today. Haven't read the decision but the only silver lining might be a true limitation of the commerce clause for the future."