It's been a slow morning so far, and utterly lacking in overt inspiration. More simply put, we haven't seen any movement in Treasuries or MBS linked to a specific headline or event.
Instead, trading essentially picked up where Friday left off, and every session since May 7ths has seen "higher lows" and "higher highs." This is very much in line with the negative technical landscape that emerged last week. Today's weakness has quickly taken trading levels back to middle ground in the longer term range (used to be 2.70, but now closer to 2.65).
MBS are holding up a bit better than 10yr Treasuries. Fannie 3.5s are down 6 ticks at 101-20 and 4.0s are down 5/32nds at 104-24. On a positive note, of the two prominent bouts of weakness this morning, the second one wasn't as severe, suggesting technical support at the day's high Treasury yields (2.66). Keep in mind though, "support" doesn't mean yields can't go higher, simply that they have a fighting chance. The analogous level in MBS is 101-17 to 101-18 in Fannie 3.5s.
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