The bond market started the day off in much stronger territory after solid overnight gains.  These could be viewed as a factor of weak equities markets or simply due to a general risk-off trade that has been going on for the entire month of May.  Either way, each additional notch toward lower yields raises the risk that the rally will bounce if for nothing other than technical reasons.  Paradoxically, the expectation of a bounce toward higher yields can fuel further gains due to short squeezes.

As far as actual events causing fear of bounces, today's 7yr Treasury auction was nothing like the 2 and 5yr varieties seen so far this week.  It was quite a bit weaker than expected.  In its defense, the auction occurred at what were nearly the best yields seen in well over a year, but weakness is weakness.  

Yields bounced decisively after the auction in yet another example of "something that fuels fears of a broader bounce."  It continues to be the case that next week--which is chock full of market movers--is the bigger deal for the fate of the market near-term, but the auction might be viewed as a "lead-off" in retrospect.  If you're antsy about all the recent gains, take that for what it's worth.  Otherwise, we just have a few more days to get through before the real info and real trading hit.


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
101-17 : +0-02
Treasuries
10 YR
2.2640 : -0.0040
Pricing as of 5/29/19 5:04PMEST

Today's Reprice Alerts and Updates
A recap of Alerts and Updates provided to MBS Live subscribers.
3:41PM  :  ALERT ISSUED: Negative Reprice Risk Increasing
1:15PM  :  ALERT ISSUED: Bonds Losing Ground After 7yr Treasury Auction
10:07AM  :  Bonds At Best Levels

MBS Live Chat Highlights
A recap of featured comments from the Live Discussion on the MBS Live Dashboard.
Matthew Graham  :  "yeah, that's like saying "in the event of weakness, here's what I'd do." Just like "in the event of a water landing, use this seat cushion.""
Peter Lassig II  :  ""Bonds At Best Levels: Any significant weakness later today should probably be taken as a great lock cue for almost everyone although big gamblers might wait to see what the ECB has to say in the morning.""
Matthew Graham  :  "broken clock"
Peter Lassig II  :  "MG: In your morning post you seemed to anticipate the selloff this afternoon. Why?"

Economic Calendar
Time Event Period Actual Forecast Prior
Wednesday, May 29
7:00 MBA Purchase Index w/e 259.4 263.0
7:00 Mortgage Refinance Index w/e 1255.4 1334.9
13:00 7-Yr Note Auction (bl)* 32
Thursday, May 30
8:30 GDP Prelim (%)* Q1 3.1 3.2
8:30 Jobless Claims (k) w/e 215 211
10:00 Pending Home Sales (%) Apr 0.9 3.8