Treasuries and MBS walked a cautious path to the exits today, staying perfectly inside the middle of yesterday's trading range. The overnight session was less dramatic than recent examples and Treasury trading in Asia/Europe seemed less interested in Portuguese drama.
Interestingly enough, Treasuries actually performed better than German Bunds, hinting at some underlying/inherent strength in US bond markets. MBS were feeling the same vibes and kept decent pace with the rally.
Prices improved steadily until just after the noon hour. From there on out, everything went sideways after a brief correction. Bonds seemed to take limited cues from equities markets, but volume and participation were so low that it doesn't make sense to read much into the movement.
Bottom line, looking at things from a 10yr Treasury perspective, yields are right near the zone that has seen the bigger bounces of 2014 (2.47-2.52). The risk is that this becomes an extended resistance area that makes for a longer term bounce. This could be ruled out with a break below 2.40, but until we're heading more convincingly in that direction or actually making that break, I'm feeling a bit more cautious heading into next week.
MBS Pricing Snapshot
Pricing shown below is delayed, please note the timestamp at the bottom. Real time pricing
is available via MBS Live.
| MBS || |
98-15 : +0-05
102-14 : +0-05
105-21 : +0-03
| Treasuries || |
0.4519 : -0.0081
2.5160 : -0.0180
3.3366 : -0.0284
| Pricing as of 7/11/14 5:30PMEST |
Today's Reprice Alerts and Updates
2:51PM : ALERT ISSUED: Reprice Risk Increasing as Afternoon Leakage Shows Up
2:34PM : Gains Mostly Holding; Slight Pull-Back in MBS; Uneventful Trading Day so Far
9:18AM : Slightly Stronger After Uneventful Overnight Session
MBS Live Chat Highlights
Hugh W. Page : "Perhaps, but if we bounce again and yields retreat higher here we could easily be back over 2.60 or higher in pretty short order."
Victor Burek : "thats why i feel longer term loans should risk floating"
Hugh W. Page : "This is the second test of this level on the 10 yr in the last 2 weeks. I want to break through before I pull up the anchor on the float boat."
Matthew Graham : "yesterday's low yields starting to form some messy potential resistance around 2.50. Longer we go without getting to 2.47, the more locky I'd feel."
Victor Burek : "rates i have seen are a little worse than yesterday, so we are due for more reprices"
Victor Burek : "let me add, would only lock short termers if lender reprices better"
Kenneth Crute : "Vic saying lock, on a friday no less?? anyone see horseman riding across the sky?"
Victor Burek : "if within 15 days...probably not a bad idea to lock today...longer term i am floating"
Victor Burek : "no, short termers should consider it"
Joseph Daquino : "VB probably disagrees :)"
Joseph Daquino : "I think that today is presenting a great opportunity to lock. "