We got the cue for which we were waiting in benchmarks as 10's crossed back over their earlier pivot along this AM's high yields. At exactly the same time, MBS crossed over their longer term pivot highlighted on this morning's MBS Commentary. The current tick-by-tick chart is linked below, but the bottom line is that previous risks of rate-sheet deterioration are basically gone. MBS looking stronger vs weaker at the moment actually.

At the risk of putting out too many "alerts" following the auction, we figured the significant portion of our mobile audience would rather have the update than not. We're in a bit of limbo following the the 10yr breakout. Charts are either forming a bear pennant for a continuation higher in yield (bad for MBS) or digging in for a supportive reversal, or even just a sideways grind. (good for MBS). Until that's determined, MBS are sort of hovering around 103-00, with no major moves up or down. Same analysis stands as last time re: meaningful move below 102-30 = riskiest reprice situation.

Too soon to say how this will shake out by the end of the day, but 10yr yields popped right out of their range to the high side following a weak 30yr auction. MBS Followed in the form of lower prices, but illiquidity makes price levels a moving target at the moment. Judging by benchmark 10's already over 1.94, and MBS having dipped into the 102-20's a few times since the auction (currently 103-00 though), we'd say reprice risk has certainly increased, but again it's too soon to say for sure what the extent of MBS' capitulation will be given yesterday's underperformance (i.e. maybe they'll make up a bit of that lost ground here). Still, some jumpy lenders might reprice shortly and it wouldn't surprise us. more of a risk if Fannie 3.5's dip meaningfully below 102-30