The US 10yr Treasury is bouncing between 3.14% and 3.10% which is causing "rate sheet influential" MBS coupons to go green then red then green then red again.This is not a function of a change in fixed income market sentiment, instead it is a factor of short term outlooks, profit taking/trying to cover shorts, and repositioning across the yield curve. Sellers are vacating their positions in 2 yr notes in favor of the seemingly oversold 10 yr sector (also possibly a function of end of month index extension).
Furthermore...at 10:15 the Federal Reserve will conduct an open market purchase of TSY coupons maturing in the 10 yr range...creating an opportunity for efficient market participants to stuff their pockets with profits.
The gyrating steepness of the yield curve (2s/10s still over 217) is creating some volatile trading behavior of "rate sheet influential" MBS coupons. The brief UST10YR recovery pushed the FN 4.0 to its intraday high which brought out MBS profit takers and originators looking to further protect their pipelines from interest rate risk (done so by selling/locking their loans on the TBA MBS market).
Check out the choppiness....
Since 5pm "Going Out" Marks...
FN30________________________________
FN 4.0 -------->>>> -0-05 to 99-30 from 100-03
FN 4.5 -------->>>> -0-06 to 101-22 from 101-28
FN 5.0 -------->>>> -0-04 to 102-26 from 102-30
FN 5.5 -------->>>> -0-02 to 103-18 from 103-20
FN 6.0 -------->>>> -0-02 to 104-17 from 104-19
GN30________________________________
GN 4.0 -------->>>> -0-03 to 100-04 from 100-07
GN 4.5 -------->>>> -0-06 to 101-30 from 102-04
GN 5.0 -------->>>> -0-05 to 103-12 from 103-17
GN 5.5 -------->>>> -0-01 to 103-28 from 103-29
GN 6.0 -------->>>> -0-01 to 104-12 from 104-13