As the close of the markets draws near, tsy's are at their best levels of the day at 3.68, having moved considerabley lower since 2:30 despite a moderate improvement in stock prices.  The 4.5 MBS is up to 99-22, 1 tick off its best levels of the day between 10 and 11 at 99-23.  This basically frosts the cake of post auction volatility today as prices have given signals that they might go either direction today.  Indeed after our first reprice alert a few more aggressive lenders did reprice for the worse, but now some of those lenders have or will soon reprice for the better on this late day strength.  All in all, this is very much the type of range-trading we had expected today despite the better than expected gains. 

Don't get too absorbed with pure price levels at this point as the roll tomorrow would take us back down around 99-10 if prices were to hold steady at the moment.  Just remember that those decreases in the price do not affect lender rate sheets as this is simply the cost of discounting MBS cash flows for another 30 days.  The final argument for the muted and range-bound trading momentum can be seen in recent 10yr futures action where significant resistance is being encountered at 116-06, which is just shy of the day's highs.

MBS, Tsy, and LIBOR Quotes