After yesterday kicked off the new month with a quick return over 2.47 in 10yr Treasury yields, the overnight session kept the selling pressure intact.  This was less of an issue during Asian market hours (Treasuries actually recovered a bit), but strong labor data a decent read on inflation in the EU sent European bonds higher in yield, dragging US rates up with them.

10yr yields made it all the way to the doorstep of 2014's previous range (2.57) before the US session began.  They bounced early this morning right after European markets ended their selling spree.  Treasuries crossed the 8am threshold at 2.55 and MBS opened 5 ticks lower at 102-15. 

The day's economic data hasn't had much of an effect, though it didn't get in the way of morning selling pressure that took Treasuries back to their weakest levels from the overnight session and resulted in new lows for MBS.  Whether it's a technical bounce or a mere coincidence soon to result in more  weakness, 10yr yields have avoided a clear break above 2.57.  While that is a relevant technical level, the 4-day trend is clearly negative and also remains intact.  In other words, we can hope 2.57 holds up as a ceiling in 10yr yields, but there's still a real risk that it won't.

2014-6-3 Treasury Range

MBS Pricing Snapshot
Pricing shown below is delayed, please note the timestamp at the bottom. Real time pricing is available via MBS Live.
FNMA 3.0
98-07 : -0-07
FNMA 3.5
102-14 : -0-06
FNMA 4.0
105-15 : -0-05
2 YR
0.3948 : +-0.0002
10 YR
2.5661 : +0.0321
30 YR
3.4000 : +0.0230
Pricing as of 6/3/14 12:51PMEST

Morning Reprice Alerts and Updates
A recap of Alerts and Updates provided to MBS Live subscribers.
12:06PM  :  Bonds Holding Ground After Testing Range Boundary
10:19AM  :  ALERT ISSUED: Negative Reprice Risk Increasing; Fighting for a Bounce at Technical Boundary
10:07AM  :  Bond Markets Remain Under Pressure after Stronger Factory Orders Data
9:23AM  :  Bond Markets Weaker Overnight; Pre-ECB Positioning Continues

Live Chat Featured Comments
A recap of featured comments from the Live Discussion on the MBS Live Dashboard.
Victor Burek  :  "think the difference is one is a loan to banks that they must pay back over a period of up to 3 years, the other is straight out buying assets like our Fed buying treasuries and MBS"
Victor Burek  :  "The European Central Bank's long-term refinancing operation is a process by which the ECB provides financing to eurozone banks. The stated aim of the LTRO is to maintain a cushion of liquidity for banks holding illiquid assets, and thus prevent interbank lending and other loan origination from seizing up as they did in the credit squeeze of 2008. "
Andy Pada, Jr.  :  "what is a LTRO and what is an ABS purchase and what is the difference?"
Matthew Graham  :  "the middle-of-the-road scenario is a rate cut and perhaps a reopening of LTROs, which they've done before. ABS purchases are a longer-shot."
Matthew Graham  :  "rate cuts are widely expected. I haven't seen a consensus on asset purchases."
Scott Valins  :  "Is there an amount of easing the markets are expecting from Draghi so we can gauge what could hurt us vs help us?"
Matthew Graham  :  "RTRS- U.S. APRIL FACTORY ORDERS +0.7 PCT (CONSENSUS +0.5 PCT) VS MARCH +1.5 PCT (PREV +0.9 PCT)"
Sung Kim  :  "although busting through 2.55 like this makes me a little sick to my stomach"
Matt Hodges  :  "lets hope so, i have some late June closings to lock"
Sung Kim  :  "gm mh - i think we will be find this week. it's your typical nfp ramp"
Matt Hodges  :  "yes, not happy"
Sung Kim  :  "Nasty overnight"