Today's 10yr Treasury auction brought strong demand.  Across the board, the auction stats were much stronger than expected.  The only real problem was that the awarded yield was the highest of any 10yr auction since July, and that goes a long way toward justifying to strong demand.  

Before the auction, however, bonds were already having an OK day.  At the very least, they weren't adding on to the disconcerting weakness seen in the previous two days.  In fact, there were signs at the open of buyers buying of their own volition (i.e. there was no economic report or mirrored move in stocks driving the trade).  Then around 11:44am, White House comments on the US/China trade deal sent stocks lower with bond yields following.

The risk to reading too much into the auction is that it happened to occur not only when bonds were in stronger demand due to the temporary risk-off vibes, but also at yield levels that may merely be providing some technical support for buyers.  Moreover, traders may not want to rock the boat too much before the 3 day weekend coming up.  Bottom line, today was better than it might have been, but we should probably reserve excitement until we see how things are shaping up next week.


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 3.0
101-11 : +0-07
Treasuries
10 YR
1.8300 : -0.0350
Pricing as of 11/6/19 5:30PMEST

Today's Reprice Alerts and Updates
A recap of Alerts and Updates provided to MBS Live subscribers.
1:10PM  :  10yr Auction About as Strong as We Could Hope For
11:52AM  :  Trade Deal Comments Help Stem Pre-Auction weakness

MBS Live Chat Highlights
A recap of featured comments from the Live Discussion on the MBS Live Dashboard.
Matthew Graham  :  "Here's the chart: higher = weaker MBS View Image"
Matthew Graham  :  "Much tighter since October 20th"
Sung Kim  :  "seems much tighter"
Sung Kim  :  "can we see a chart of mortgage spread to tsy?"
Matthew Graham  :  "of all the days to regret locking, yesterday is not high on the list"
Sung Kim  :  "one tweet could have made you say opposite :)"
Sung Kim  :  "bird in hand...."
Dmitriy S  :  "I'm so mad at myself for locking a bunch of loans yesterday"
Timothy Baron  :  "Nice. Just what we needed."
Matthew Graham  :  "very strong"
Matthew Graham  :  "PRIMARY DEALERS TAKE 23.09 PCT OF U.S. 10-YEAR NOTES SALE, DIRECT 12.37 PCT AND INDIRECT 64.54 PCT"
Matthew Graham  :  "U.S. 10-YEAR NOTES BID-TO-COVER RATIO 2.49, NON-COMP BIDS $20.01 MLN"
Matthew Graham  :  "U.S. SELLS $27 BLN 10-YEAR NOTES AT HIGH YIELD 1.809 PCT, AWARDS 45.79 PCT OF BIDS AT HIGH"
Matthew Graham  :  "10yr Auction Preview: expected yield (when-issued) is 1.821 currently, but could change a bit before the 1pm cut-off time. Bid-to-cover has averaged 2.40x for refunding auctions, but only 2.18x for the last 2 (expect a number closer to bottom of that range). Indirect bidders have taken more than 60% on average, but less than 56% the last 2 times. Again, expect the lower end of the range."
Matthew Graham  :  "Here's the decoder ring for the following chat: Treasury Auction Jargon, Definition, and Significance "

Economic Calendar
Time Event Period Actual Forecast Prior
Wednesday, Nov 06
7:00 Mortgage Refinance Index w/e 2102.7 2066.0
7:00 MBA Purchase Index w/e 241.0 247.2
8:30 Labor Costs Preliminary (%) Q3 3.6 2.2 2.6
13:00 10-yr Note Auction (bl)* 27
Thursday, Nov 07
8:30 Jobless Claims (k) w/e 215 218
13:00 30-Yr Bond Auction (bl)* 19