Bonds lost some ground today. 10yr yields were up roughly 4bps and MBS fared a bit better, losing only about an eighth of a point. That sounds like bad news at first glance, but there are a few silver linings. First off, rate sheets were generally better than Friday's as lenders hadn't fully caught up to last week's big rally. Moreover, in the bigger picture, today marked the first consecutive close under 1.50% in 10yr Treasuries since yields broke above that level in late September. In other words, this wasn't as much of a big, vicious rebound as much as a reasonably calm range-finding expedition. The rest of the week could be more random than normal due to the rare mid-week holiday closure on Thursday.
Fed MBS Buying 10am & 1130am
Modestly weaker overnight amid fairly light volume. 10yr up 2.6bps at 2.5 UMBS down 6 ticks (.19).
Flat all morning but slightly weaker now with 10yr up 3.5bps at 1.49. MBS doing a better job holding ground with 2.5 coupons still down only an eighth at 103-07 (103.22).
Some additional weakness after the 3yr Treasury auction, but bonds quickly fell back in line with previous trends. 10yr still drifting slightly higher, up 4bps at 1.495 and 2.5 UMBS down an eighth.