Ahead of the 1pm auction the 10 yr note has tried to let the range moderate overnight losses...but the retest failed and support levels were broken...
The 10 yr note's failure to rebound from recent selling is indicative of more selling to come...meaning "rate sheet influential" MBS coupons may be in for some price declines....
REPRICE FOR WORSE WATCH IN ON!!!
Longer term technicals indicate the 10 yr is OVERSOLD and due for a recovery rally in the near future...meaning MBS coupons are also due for a relief rally.
ALL EYES ON 1PM....
2s vs. 10s: 260
This issuance (reopening) is over 70bps cheaper than where the initial issuance was priced a month ago. This issuance (reopening) is 95bps cheaper than April's reopening. The 10yr sector on the yield curve has seen light trading flows this morning...mostly seller related too.
PLAIN AND SIMPLE: this is a cheap note. If bidders dont chase after it...we will be surprised.
MBS Market Alerts
