MBS Live Recap: 3 Times in a Row: Auction Week Bringing The Weakness

Bonds have been consolidating in roughly a 17bp range centered on 10yr yields of 1.30%.  During this consolidation phase, yields have hit the ceiling (1.37+) 3 distinct times.  Each of those bounces corresponds with a Treasury auction cycle.  2 of the 3 examples include follow-through momentum from a poorly received jobs report (with this week being one of the 2).  There's no way to know if the same pattern (the one where bonds turn a corner and calm down by the end of the week) will play out this time, but the stakes appear to be higher with yields already knocking on the 1.37+ ceiling.

Econ Data / Events
Market Movement Recap
08:41 AM

Bonds weaker on supply ramp-up (corporate bonds + Treasury auctions).  Steady overnight selling.  10yr up 4bps to 1.368 and MBS starting 5 ticks (.16) lower.

12:10 PM

Sideways to slightly weaker in Treasuries as pressure persists from corporate bond issuance.  MBS still outperforming, now down only 3 ticks (.09).  10yr yields are up 4bps at 1.366.

02:55 PM

Flat all day at this point, after overnight weakness.  10yr yields continue dancing around the 1.37% technical level while MBS dance around an eighth of a point of losses.  

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