Know how much you guys hate sell-off days? That's about how much we hate days like today when nothing happens, prices are rangebound, there is no volume and thus no indication of sentiment. Of course today would be a good candidate for those afflictions due to the relative lack of data and the tsunami of impending tsy auctions beginning with tomorrow's $42 bln in 2yr's.
Most of the analysis and opinion we gathered today agreed that knives were in the air until the auction results started to hit. As far as today's TIPS auction, not only did no one care, but it showed! Absolutely no discernable change in the range after the results.
Staying on the topic of ranges, it's not uncommon to see prices operate in algorithmically defined ranges when the market has no data to trade. This was more or less the case today as the range channels we drew in MBS this AM persisted all the way through close. This also helped prices get back to a high enough level to allow them to adhere to their longer term trend of higher lows.
But I'd urge you not to pay too much attention to anything that happened today or to anything you're seeing on the charts. As has been the case for a few months now, when tier one data hits, it's given first right of refusal to dictate the momentum of our short term rates environment. In other words, the bond market will probably take a majority of it's direction over the course of this week and the next from the impending auction results. However, if the results are truly "down the middle" enough so as to elude interpretation, there will be no direction, and we'll be right back to waiting for guidance. But whatever the case, these auctions are the first scheduled speaker on that topic...
If you didn't catch it earlier, or if you need to revisit some of our thoughts on the general nature of treasury auctions and the recent MBS environment, go back and read the bullet points in this post.
On another topic, check out MND's most recent community commentary, submitted by a user of the site like yourselves. Please feel free to discuss, comment, or perhaps even write your own community commentary!
Other than that, tune in tomorrow where you KNOW we'll be discussing the auction's impact on MBS the minute results are released.
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