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MBS RECAP: Yields Find a Floor Ahead of Month-End and Long Weekend
May 26 2021, 3:35PM

Today's most notable feature was a paradoxical move toward higher yields immediately following a strong 5yr Treasury auction.  There was nothing in the auction results that would allow the weakness to be rationalized and there were no other overt market movers at the time.  We're left to conclude this is a byproduct of traders circling the wagons as Friday's month-end trading deadline approaches (markets are closed on Monday the 31st).  In any event, we were looking for a resistance bounce after yields traversed most of their recent range in the past 4 days and for now, it looks like we found it.

Econ Data / Events
Market Movement Recap
08:50 AM

Weaker at first in the overnight session, but another EU bond rally led US yields back toward unchanged levels (German Bunds are 3bps lower on the day vs US 10yr yields 1bp higher at 1.57%).  MBS started the day roughly unchanged as well, but have lost 2 ticks so far (-0.06). 

12:42 PM

MBS stumbled a bit between 1030am and noon, with the the only real scapegoat being high supply at today's Fed buying operation.  We could also consider that things have been a bit bullish on the Treasury side of the bond market so far this week, but we'll see what's what after the 1pm 5yr auction.

01:40 PM

paradoxically weaker after a fairly strong 5yr Treasury auction. No obvious scapegoats other than a reshuffling of trading positions and a bit of a curve-steepening bias.  10yr up 2bps now at 1.579.  UMBS 2.5 down an eighth at 103-23 (103.72).

03:31 PM

Bonds crossed the 3pm CME close with modest weakness intact and no major drama since the modest sell-off that followed the 5yr Treasury auction.  Same trading levels as the last update.

MBS Pricing Snapshot
Pricing shown below is delayed, please note the timestamp at the bottom. Real time pricing is available via MBS Live.
UMBS 2.5
103-23 : -0-04
10 YR
1.5790 : +0.0150
Pricing as of 5/26/21 3:35PMEST

Today's Reprice Alerts and Updates
A recap of Alerts and Updates provided to MBS Live subscribers.
1:27PM  :  ALERT ISSUED: MBS At Lows After 5yr Auction
9:01AM  :  Pushing Back Against Overnight Weakness to Start Unchanged

Economic Calendar
Time Event Period Actual Forecast Prior
Wednesday, May 26
7:00 MBA Purchase Index w/e 269.8 265.3
7:00 MBA Refi Index w/e 3168.8 3413.3
13:00 5-Yr Note Auction (bl)* 61
Thursday, May 27
8:30 GDP Prelim (%) Q1 6.5 6.4
8:30 Durable goods (%)* Apr 0.7 0.8
8:30 Core CapEx (%)* Apr 0.8 1.2
8:30 Continued Claims (ml) w/e 3.680 3.751
8:30 Jobless Claims (k) w/e 425 444
10:00 Pending Sales Index Apr 111.3
10:00 Pending Home Sales (%) Apr 0.8 1.9
13:00 7-Yr Note Auction (bl)* 62

About the Author

Chief Operating Officer, Mortgage News Daily / MBS Live
A former originator, Matthew began writing for Mortgage News Daily in 2007, covering a wide range of topics. Seeing a need in the marketplace, his focus increasingly shifted toward relating MBS and broader financial markets for loan originators. ... more

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Mortgage Rates:
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