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.
Fed MBS Buying 10am, 1130am, 1pm
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.
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.
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.