Today's bond trading was largely a story of the 3yr Treasury auction vs the 10yr Treasury auction.  Both of these are used to encountering each other on the same week, but not usually on the same day.  In fact the "3, 10, 30" auction cycle seen this week typically happens on "T, W, and Th" respectively.  The calendar is condensed this week due to the Fed Announcement on Wednesday afternoon.  

Bonds were slightly weaker in the overnight session, but yields were doing a good job holding underneath Friday's higher levels.  The 3yr auction shook things up.  This is notable in itself because broader bond markets usually don't respond to 2 or 3yr auctions much at all.  This time was different--possibly because it was the strongest auction in nearly 2 years or possibly because investors were looking for any clues they could get regarding other investors' mindsets heading into the more relevant events in the middle of the week.

The strong 3yr auction helped bonds move into positive territory on the day. There they waited to see if the 10yr auction would convey a similar sense of strength or if it would do more to moderate the positive tone.  While the 10yr results weren't "weak," by any means, they stopped very well short of confirming the same sort of fervor conveyed by the 3yr auction.  Bonds moved right back in line with morning levels (slightly weaker on the day) and that was that.

MBS Pricing Snapshot
Pricing shown below is delayed, please note the timestamp at the bottom. Real time pricing is available via MBS Live.
FNMA 3.5
102-31 : -0-04
10 YR
2.2145 : +0.0155
Pricing as of 6/12/17 5:16PMEST

Today's Reprice Alerts and Updates
A recap of Alerts and Updates provided to MBS Live subscribers.
4:37PM  :  ALERT ISSUED: Negative Reprice Risk Increasing
1:51PM  :  ALERT ISSUED: Negative Reprice Risk For One or Two Lenders
1:29PM  :  10yr Auction Weaker Thanks to 3yr Auction's Effects
11:43AM  :  3yr Auction Strong Enough to Move The Whole Curve
10:08AM  :  Slight Bounce at NYSE Open, But Still Weaker on the Day

MBS Live Chat Highlights
A recap of featured comments from the Live Discussion on the MBS Live Dashboard.
Matthew Graham  :  "The "higher rates in 2017" narrative has already unraveled. Now just waiting to see if bond bulls launch a bigger counterattack. At this point in the bounce back in 2014, we had European QE to pin longer-term hopes on. Bond bulls will have to rely on more diffuse ammunition this time around. In other words, there isn't as much of a singular focus on one big thing. We might even be back into that old school mindset of actually caring about what economic data suggests about the economy as opposed to merely its impact on Fed policy."
Andrew Haynes  :  "I hate going against the grain...everyone is calling for bad 30 year fixed originations the rest of year, but I don't think the long end goes up much until latter part of 2017"
John Tassios  :  "agreed MG on your grade. no cheapening prior to auction, so that took away some steam"
Matthew Graham  :  "hard to grade. Would have likely been an A before the 3yr auction. It's a C+ outright, and a B in the context of the recent range. How about "pretty good, considering the circumstances.""
Matthew Graham  :  "RTRS - U.S. 9-YR 11-MO NOTES BID-TO-COVER RATIO 2.54, NON-COMP BIDS $9.95 MLN"
Matthew Graham  :  "RTRS - U.S. SELLS $20 BLN 9-YR 11-MO NOTES AT HIGH YIELD 2.195 PCT, AWARDS 0.63 PCT OF BIDS AT HIGH"
Matthew Graham  :  "10yr auction stats: Bid-to-cover range 2.48-2.66, Indirect bid range 60-70%, current yield expectation: 2.186-2.188 (to learn about or brush up on these terms: Treasury Auction Jargon, Definition, and Significance )"
John Tassios  :  "Good stuff MG. with 10 year as the benchmark of the curve, im thinking a solid A + at 1:00 auction."