Guess what?

The FN 4.5 is moving back towards 100-00....partnertia!!!

...and the FN 5.0 still wont venture too far into the 102-00 price handle. 102-00 just keeps pulling on prices...

It was definitely a bit of a boring day. The three day holiday haze appears to have hampered market activity today as volume was low and trading flows were light...looks like many decided to take an extra day off!

I will say this about the activity that DID OCCUR today though....early in the session benchmark yields were moving higher and it was looking like TSY traders weren't going to allow last week's momentum to be carried over into today, likely to make room for TSY supply to be auctioned this week.  However as the day wore on we saw "increased buying on the dips"...which implies the market is ok with the 10 yr trading under 3.55%. So...that said, based on what trading did take place today, and the fact that the yield curve seemingly began to detach itself from stocks...it looks like the street is setting up for the 10 yr note to test lower yields. This would be a step in the right direction for mortgage rates...

 

2s vs. 10s: 256bps

MBS QUOTES

PS...Regardless of the fact that the yield curve showed signs of detaching from stocks...a sell off in equities would add some steam to a rally that helped the yield curve flatten.