Bonds were facing headwinds as the week began.  Friday had just seen an exceptionally strong NFP.  Yields were quickly pushing toward the higher end of their post-Brexit range.  And significant "supply"--both from corporate bonds and scheduled Treasury auctions--was yet to come.  Indeed, it looked as if we were risk of seeing the range break on the unfriendly side.

But today has gone a long way in calming those fears.  After hitting 1.616% yesterday, 10yr yields were as low as 1.535% today.  Domestic economic data didn't hurt, with Productivity coming in at -0.5% vs a median forecast of +0.4%, but bonds look like they would have rallied regardless.

Interestingly enough, it was actually "supply" that helped get today's party started, but not quite the same supply we were worried about.  Instead, there was a LACK of supply when the Bank of England tried to buy bonds early this morning.  

That provided a stark reminder about the commoditization of longer-duration government bonds ("buy this stuff and hope to sell it at a higher price, without regard for its yield") and helped European markets lead global bond yields lower in the morning.  Investors were even clamoring to buy 3yr Treasuries as evidenced by the strong auction at 1pm.  That helped add to gains that were already in place from the morning hours.  

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
103-29 : +0-09
10 YR
1.5500 : -0.0350
Pricing as of 8/9/16 4:58PMEST

Today's Reprice Alerts and Updates
A recap of Alerts and Updates provided to MBS Live subscribers.
1:22PM  :  3yr Auction Speaks to Bond Market Demand
10:35AM  :  Best Levels This Week, Despite Headwinds

MBS Live Chat Highlights
A recap of featured comments from the Live Discussion on the MBS Live Dashboard.
Ted Rood  :  "no longer in immediate danger of being dashed on the cliffs?"
Christopher Stevens  :  "float boats headed to deeper water"
Andrew Haynes  :  "no, sorry I read that wrong"
Hugh W. Page  :  "85 bps too. Yee hah"
Matthew Graham  :  "or perhaps international accounts loading up on Treasuries because they don't see the Fed hiking? Or perhaps international accounts loading up on Treasuries because at least there's some yield there?"
Matthew Graham  :  "Like did traders suddenly realize something about the Fed that made them want to buy more 3yr notes at auction?"
Matthew Graham  :  "That question made my head explode. Not sure why."
Andrew Haynes  :  "that's good info MG, you think it has anything to do with expectations of what fed will do in December...or perhaps sept?"
Matthew Graham  :  "
MBS Live Update Issued
3yr Auction Speaks to Bond Market Demand"