The 10yr is now -0-10 at 100-26 yielding 3.526...AND RISING FAST
Here is the longer term look at THE RANGE....you can see that the range has been briefly broken in the last three months, but nothing that lasted.
Higher benchmark yield have led "rate sheet influential" MBS prices lower. The FN 4.0 is currently -0-05 at 97-25 while the FN 4.5 is -0-06 at 100-14.
Another week has come and gone...while intraday activity produced
choppy price action, the range moderated and price directionality was
once again indicative of nothing more than the market's short term
trading bias. A few observations and questions do arise from the week
that was though....
The obvious candidate for OBSERVATION OF THE
WEEK was the fact that the 10yr yield pushed towards 3.50%, testing a
support level that has held strong for the most recent three months... in the process,
rousing concerns that we might getting played by the range without even
knowing it. As to why yields are poking and prodding at such stirdy
support levels...well just as we have been saying all summer: ITS A
TRADERS WORLD AND WE'RE JUST LIVING IN IT.
What Reason Do Trader's have to Push Yields Higher?
$123 in 5 yr TIPS, 2 yr Notes, 5 yr Notes, and 7 yr Notes.Treasury Debt Supply!
But all summer and into fall, TSYs performed well regardless of economic data, a weak dollar, strong stocks, AND record debt supply. Why now?
One big reason. The Federal Reserve is just about done with the Treasury Purchase Program.
Without the Fed's buying presence in the TSY market, fixed income investors will be left to fend on their own. Something not done since March...that said, the market is has good reason to let yields run a few basis points higher into auctions.
If it keeps on raining, levees gonna break....when the levee breaks you gotta move.
If your lender has already published pricing, which a few have, you will get a reprice for the worse. If your lender has not released rate sheets yet, expect a delay