Behind the scenes, bond market activity was very light today--not uncommon for Mondays and most Friday's during the summer months. In the morning, the lack of participation was inconsequential as the smaller amount of trading was well-balanced at just slightly stronger levels. That enabled MBS to maintain most of Friday's gains even after stronger-than-expected economic data.
The light volume allowed the afternoon to quickly get out of balance in favor of sellers. There were several 'suspects' in play just before the weakness arrived, but none worth putting under a microscope while bond markets remained so squarely inside their recent range.
MBS Prices fell enough that most lenders repriced negatively, but remained above Friday morning's levels. Tomorrow is a busy data day, even if lacking in big-ticket events. Both main home price reports are out at 9am with New Home Sales and Consumer Confidence out at 10am. The afternoon kicks off the week's Treasury auctions.
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