A Glimmer of Resilience and a Primer on Which MBS Coupon to Watch
Bonds began the day by resuming the selling trends seen at the end of last week. MBS hit new long-term lows and 10yr yields just barely tagged higher levels than last Friday before buyers stepped in to stop the bleeding. It's definitely too soon to say that this is evidence of the technically-motivated, corrective, value-buying that puts an end to the more acute phase of the sell-off, but we know those types of corrections always happen eventually. We also know that we'll have a better sense of potential resilience (or lack thereof) when we see how markets navigate Wednesday's events. Between now and then, there's hope. There's also today's video which discusses the switch to the 3.0 UMBS coupon (and the way you can continue following the 2.5 coupon if you prefer).
Fed MBS Buying 10am, 11:30am, 1pm
Early weakness after starting near unchanged levels. 3.0 UMBS are down nearly 3/8ths, but liquidity is poor (prices could move in bigger chunks if bonds stabilize). 10yr yields are up 3.2bps at 1.798. Corporate supply is adding pressure.
MBS relatively flat since 9am. Treasuries off their weakest levels, now up 2.9 bps at 1.792 (intraday highs were 1.808).
Nice little bounce heading into PM hours, but bonds weren't able to capitalize. 10yr bounced at 1.77 pivot, now sideways at 1.78. MBS down nearly a quarter point (3.0 coupons).