MBS have managed to hold on to most of their gains seen on Friday, even after Existing Home Sales came in stronger than expected. Prices were higher earlier this morning.
Treasuries set an upbeat tone after 10yr yields moved 2-3bps lower overnight. Fannie 3.5s opened higher as a result and were as high as 102-16 before the morning's economic data.
A combination of slightly stronger Manufacturing data (Markit PMI, as opposed to the drastically more important ISM PMI) and slightly stronger Existing Home Sales made for only a slight bump lower in MBS (eighth of a point). Since then, the losses haven't accelerated, keeping reprice risk in check for now.
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