Bonds Give up Gains After Bumpy Auctions

Amid and absence of any relevant economic data, bonds were forced to focus on the 3 and 10yr Treasury auctions for guidance.  But the only guidance offered was toward the absence of any willing buyers ahead of the big risk events of the next two days.  Both auctions went poorly, contributing to upward pressure on yields at 11:30 and again at 1pm.  If anything, 10yr yields held their ground fairly well considering the auction results.  MBS held their ground even better, ultimately clawing their way back to  positive territory after being down nearly a quarter point at the weakest levels.  None of today's volatility is remotely relevant in the bigger picture.  All eyes remain on tomorrow's CPI results and the Fed announcement that follows just over 24 hours later. 

Econ Data / Events
    • No significant econ data
Market Movement Recap
09:01 AM

Stronger at the start of the overnight session amid a risk-off trade on covid news in China.  Some additional buying in Europe.  10yr down 5.7bps at 3.529.  MBS up a quarter point but possibly more by the time liquidity improves.

11:08 AM

Some selling pressure at 10am.  10yr down only 1.3bps now at 3.573, the highest of the domestic session.  MBS are up only 3 ticks (.09) now.  

01:04 PM

More weakness after 10yr Treasury auction.  MBS down almost a quarter point.  10yr up 4.2 bps at 3.628.

03:38 PM

Decent recovery for MBS since the Treasury auction, now back to 'unchanged' on the day.  10yr yields are still up, but now only 2.8bps at 3.613.

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