At the end of last week, we noted the looming Treasury auction cycle at the start of this week.  Due to calendar constraints, it's earlier than normal and more condensed (2 auctions Monday and one on Tuesday as opposed to the typical T-W-Th format).  The pattern of extra weakness in bonds on the 2-3 business days leading up to the auction cycle has been more reliable than normal in the past few months.  This time around, however, the weakness is breaking multi-month technical ceilings as opposed to staying range-bound. 

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Could the auction-cycle pattern repeat itself?  In other words, will we see some refreshing resilience after Monday's 5yr auction and decent gains after Tuesday's 7yr conclusion?  The answer to that question doesn't much matter at the moment.  Bonds have shifted away from a sideways consolidation pattern rather decisively.  Auction or no auction, that weakness will bring in buyers at some point and that buying will help set the boundaries of the bigger-picture trend.  If that trend is taking guidance from one fundamental input, we'd still have to give credit to covid before anything else (Fri/Sat/Sun all saw case counts continue to decline at a similar pace to the earlier part of last week). 

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On average, case count declines are now accelerating at a similar pace to that seen in early 2021.

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MBS Pricing Snapshot
Pricing shown below is delayed, please note the timestamp at the bottom. Real time pricing is available via MBS Live.
MBS
UMBS 2.5
103-05 : -0-04
Treasuries
10 YR
1.4780 : +0.0170
Pricing as of 9/27/21 9:50AMEST

Tomorrow's Economic Calendar
Time Event Period Forecast Prior
Monday, Sep 27
8:30 Durable goods (%)* Aug 0.7 -0.1
11:30 2-Yr Note Auction (bl) 60
13:00 5-Yr Note Auction (bl)* 61
Tuesday, Sep 28
9:00 CaseShiller 20 yy (% ) Jul 19.9 19.1
9:00 Monthly Home Price yy (%) Jul 18.8
10:00 Consumer confidence * Sep 114.9 113.8
13:00 7-Yr Note Auction (bl)* 62
Wednesday, Sep 29
7:00 MBA Purchase Index w/e 283.9
7:00 MBA Refi Index w/e 3391.1
10:00 Pending Home Sales (%) Aug 1.3 -1.8
10:00 Pending Sales Index Aug 110.7
Thursday, Sep 30
8:30 GDP Final (%) Q2 6.6 6.6
8:30 Jobless Claims (k) w/e 333 351
9:45 Chicago PMI * Sep 65.0 66.8
Friday, Oct 01
8:30 Core PCE Inflation (y/y) (%)* Aug 3.5 3.6
10:00 ISM Manufacturing PMI * Sep 59.6 59.9
10:00 Consumer Sentiment (ip) Sep 71.0 71.0
10:00 Sentiment: 1y Inflation (%) Sep 4.7
10:00 Sentiment: 5y Inflation (%) Sep 2.9