MBS Live Recap: Bonds Look Past Weaker Treasury Auction

Treasury auction have been more important than normal so far in 2021 as they serve as good opportunities for traders to vote on the pace of rising rates.  Most recently, they've been a litmus test for break from uptrend.  While we can't really expect a strong endorsement of a massive bond rally, merely holding under certain ceilings is victory enough.  Today's relatively calm reaction to a fairly weak 10yr auction continues the recent tradition of bonds NOT freaking out every chance they get.

Econ Data / Events
Market Movement Recap
09:44 AM

Bonds were unchanged overnight with gains in Asia and weakness in Europe.  That weakness has continued at a slow and steady pace as the domestic session gets underway.  10yr yields now up 1.4bps at 1.676 and 2.5 UMBS are down 3 ticks (0.09).  Waiting on Treasury auctions.

12:20 PM

Little-changed from earlier levels after modest initial weakness.  10yr has been sideways, trading roughly 1.3bps higher in yield at 1.675.  UMBS 2.5 coupons down 2 ticks (-0.06) at 103-05 (103.16).

01:21 PM

Treasury auction slightly weaker, but no major negative reaction in the bond market.  Still at the same levels as the last update.

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