Housing Data is in....
Existing Homes Sales Data was slightly better than expected...4.68mm sales per year vs. the median expectation of 4.66mm sales per year. March data was revised worse....from 4.57mm to 4.55mm.
The FHFA said home prices fell 1.1% further in March after a revised for the worse 0.2% increase in February. The March decline is the largest since November 2008.
Although the headline news may have logically added weakness to the TSY market, the selling sentiment is mostly based on pre-auction positioning and profit taking following overnight/early morning buying. At the moment fixed income traders are setting themselves in a manner that would indicate another strong 5 yr note auction...the UST5YR note is currently +137 over the 2 yr TSY note. Pretty cheap....
In the MBS market...sellers again outnumber the buyers (hate using that as explanation but its true) as the Fed's participation has been light so far this morning. There has been some bargain buying reported as prices are still off their recent rich levels (but still rich compared to TSYs as spreads are super tight).
The Treasury will offer $35bn 5 yr notes at 1pm. Stay alert....investors will be jumpy and fast to reprice for the worse in this environment....
The 10 yr is just off its intraday 3.57% high yield ...the 5 yr is trading -0-02 at 97-30 yielding 2.32%
MBS Market Alerts
