The past 3 trading sessions have largely represented a consolidation in prices and yields, just off the best levels of the year.  There has certainly been a risk that rates were bouncing off those levels only to begin the next uptrend (much like mid April through mid-May), but there's some solace to be taken in the "ceiling" behavior seen around 2.22% in 10yr yields.  

It's not that 2.22% has been an unbreakable line in the sand, but it has been at the higher end of a sideways range where we've seen yields making more of an effort to bounce on horizontal levels.

2017-6-13 close

What does it all mean?  Nothing too fancy, but it does confirm something we'd frequently assume before any major Fed announcement: bonds are ready to go either way.  That might sound like unimportant common sense, but the more neutral approach makes a difference.  This isn't a bond market that is clearly determined to head back toward higher yields.  Bonds CARE about tomorrow's data and events.  The outcome of those events is likely to inform the next move.

Bonds reinforced their willingness to consider holding ground at current levels by putting together a rather decent amount of demand for today's 30yr bond auction, even after this morning's stronger producer inflation data.  If rates were feeling some underlying urge to move higher, we would likely have seen it this afternoon.  Instead, we saw modest gains bringing us back in line with recent mid-points.  That makes tomorrow all the more interesting.


MBS Pricing Snapshot
Pricing shown below is delayed, please note the timestamp at the bottom. Real time pricing is available via MBS Live.
MBS
FNMA 3.5
102-30 : -0-01
Treasuries
10 YR
2.2127 : -0.0003
Pricing as of 6/13/17 4:55PMEST

Today's Reprice Alerts and Updates
A recap of Alerts and Updates provided to MBS Live subscribers.
1:08PM  :  30yr Bond Auction Perfectly Acceptable; No Drama
11:03AM  :  Bonds Back into Positive Territory Amid "Risk-Off" Move
8:55AM  :  Bond Markets Modestly Weaker Following PPI Data

MBS Live Chat Highlights
A recap of featured comments from the Live Discussion on the MBS Live Dashboard.
Matthew Graham  :  "Right down the middle. "B""
Matthew Graham  :  "RTRS - PRIMARY DEALERS TAKE 29.58 PCT OF U.S. 29-YEAR 11-MONTH BONDS SALE, DIRECT 6.71 PCT AND INDIRECT 63.71 PCT"
Matthew Graham  :  "RTRS - U.S. 29-YEAR 11-MONTH BOND BID-TO-COVER RATIO 2.32, NON-COMP BIDS $2.46 MLN"
Matthew Graham  :  "RTRS - U.S. SELLS $12 BLN 29-YEAR 11-MONTH BONDS AT HIGH YIELD 2.870 PCT, AWARDS 63.87 PCT OF BIDS AT HIGH"
Matthew Graham  :  "30yr auction stats: bid-to-cover has been running in the 2.2-2.4 range since December. Yields tend to come in higher than expected on average, but in a range of -1.3 to +0.9 vs 1pm expectation. Current expectation is 2.87-2.873. Indirects pretty consistently between 59-67%. If this is confusing, read this: Treasury Auction Jargon, Definition, and Significance "
Matt Hodges  :  "i'd take a B- and be done with supply"
John Tassios  :  "looking for a solid "A" 30 year ....."

Economic Calendar
Time Event Period Actual Forecast Prior
Wednesday, Jun 14
8:30 Retail sales mm (%)* May 0.1 0.4
8:30 Core CPI Year/Year (%)* May 1.9 1.9
8:30 CPI mm, sa (%)* May 0.0 0.2
14:00 FOMC rate decision (%)* N/A 1.125 0.875