Strong Auction But Bonds Retreat at The Close
This morning's market summary headline mentioned the strong start but with no guarantees for the afternoon. The thinking at the time was that overnight gains failed to materialize into a significant rally and early domestic traders were clearly pushing back in an unfriendly direction. Trading was flat for the first few hours and then modestly stronger heading into the 10yr Treasury auction. The auction itself was quite strong, but perhaps for the wrong reasons. Bonds ultimately sold off to the weakest levels of the day after the 3pm CME close.
Fed MBS Buying 10am, 11:30am, 1pm
Bonds slightly stronger in Asia. A sharper rally in Europe helped US 10yr yields drop as low as 1.916 before bouncing gradually up to 1.94% currently. 3.0 UMBS are up 3 ticks (.09) as liquidity finally sets in.
Lowest domestic-session yields of the day with 10yr down 4bps at 1.925. UMBS 3.0 coupons are up an eighth of a point at 101-11 (101.34).
Initially stronger after 10yr Treasury auction but now back to pre-auction levels. 10yr yield up 3.6bps at 1.929 and 3.0 UMBS up 1 tick (0.03) at 101-08 (101.25).