MBS Pricing Snapshot

It took bond markets a few minutes, but several more substantial trades came across in Treasuries, reinforcing the technical ceiling connoted by mid 1.72% 10yr yields, or so it would seem. 10's are having a hard time deciding if they'll break below 1.71 or head back above 1.72. They moved quickly lower toward 1.71 several minutes ago and are now back up to 1.718. The stock lever has been a bit of a problem as S&P's popped into new highs. These aren't huge moves we're talking about, of course, but they do stand out from the past 2+ hours of narrowness.

MBS were already outperforming and thus the slightly positive volatility has helped them break into positive territory, but they have indeed followed the same "which way did he go" routine as Treasuries. Fannie 3.0s briefly hit 104-10 at their best but have since fallen back to 104-08.

Just looking at the charts, the activity looks positive for MBS, but probably isn't positive enough for any serious reprice potential. The exception would be one of the "stability" reprices that we occasionally see from Provident and less frequently from a few others, but that's not something we'd flat-out expect.

Another problem could be that bond markets in general, come across as lacking conviction for gains in the face of a stock market rally. 10's look happy to simply hold their ground around 1.72, give or take a bp while stocks do their thing. It could continue to limit MBS, which are already outpeforming both today and this week in general. Conclusion, MBS turning positive after the auction wasn't necessarily a head-fake, but won't have an easy time doing any better unless something changes with the Treasury/Equities situation.