Bonds Improve After Treasury Auction; Why MBS Are Lagging
Bonds began the day weaker, but improved steadily after the 10yr Treasury auction. MBS underperformed--partly because the Treasury auction brings more direct benefit for Treasuries, but for a few other reasons as well. We'll discuss those (and whether or not they're important) in today's recap video.
Fed MBS Buying 10am, 1130am, 1pm
10yr auction grade: A
Bonds are unchanged despite weakness in EU bond market. Yields were as high as 1.631 (now 1.608). MBS are 1 tick weaker (0.03) at 102.59 (2.5 coupons).
Slightly weaker into the 9am hour, then stronger after the 9:30am NYSE open. Levels are back in line with the first update (i.e. close to unchanged).
More gains after solid 10yr auction. Now at best levels down almost 3bps at 1.584. MBS are unchanged.
MBS at best levels now, up 9 ticks (0.03) at 102-22 (102.69). 10yr yields are down 3.5bps at 1.577. Gains generally continued after the 10yr auction (no new market movers)