Bonds saw a rare post-8am rally today.  Even though there were European considerations potentially contributing to the rally, recent positivity has been far more predisposed to occur during the overnight hours with domestic hours marking more of a struggle.

Despite a fairly weak 30yr bond auction, we were still treated to a bit of the post-supply relief rally discussed as a possibility this morning.  In fact, everything went down in fairly classic fashion in terms of the initial knee-jerk making things look temporarily grim at 1pm followed by a moderately stronger move to the best levels of the day.  It wasn't anything extreme, but it was "nice" nonetheless.

Today's trading activity added to the case that last Friday's NFP reaction marked a potential turning point for recent trends.  It would have been nice if that was an instantaneous bounce for bonds, but alas!  We instead saw what's amounted to a sideways grind as rates have gone no higher or lower than the highs and lows seen on Friday. 

10yr yields hit their 3pm close on exactly the same level for the past 2 sessions (2.359) and went on to treat it as the most frequently visited supportive ceiling today (ultimately hitting 3pm at 3.349).  Stocks are expressing their sideways leanings as well with the S&P closing at essentially the same level (within 1 point) for 3 days in a row.  Long story short, stocks and bond yields were both trending higher until NFP and they've now been dead flat.  It would seem that the burden of proof is now on tomorrow morning's Retail Sales as far as making a case for recent trends to continue.  If it's weaker than expected, both stocks and bonds are ready for something new.

MBS Pricing Snapshot
Pricing shown below is delayed, please note the timestamp at the bottom. Real time pricing is available via MBS Live.
MBS
FNMA 3.0
99-28 : +0-11
FNMA 3.5
103-10 : +0-09
FNMA 4.0
106-03 : +0-06
Treasuries
2 YR
0.5190 : -0.0240
10 YR
2.3430 : -0.0300
30 YR
3.0730 : -0.0320
Pricing as of 11/13/14 4:48PMEST
Today's Reprice Alerts and Updates
A recap of Alerts and Updates provided to MBS Live subscribers.
1:28PM  :  And Here's That Much-Hoped-For Post-Auction Bounce
1:13PM  :  ALERT ISSUED: Bond Markets Weaker After Bond Auction, Probably Avoiding Reprice Risk for Now
9:44AM  :  Domestic Bond Markets Acknowledge European Rally, but Still Can't Commit
MBS Live Chat Highlights
A recap of featured comments from the Live Discussion on the MBS Live Dashboard.
Matthew Graham  :  "AP: "Sometimes after the last Treasury auction of any given week, we see a so-called "relief rally" where traders who were cautious, hesitant, or otherwise "making room" for the week's auctions can once again trade unencumbered by such concerns. It's never usually a major motivation for new gains, but it helps bring about shifts from negative to positive trends frequently enough that we always entertain it as a possibility. " - http://mndne.ws/1oROwhq"
Andy Pada, Jr.  :  "what is the reason for the post-auction bounce?"
Matthew Graham  :  "RTRS- U.S. 30-YEAR BOND BID-TO-COVER RATIO 2.29, NON-COMP BIDS $10.39 MLN"
Matthew Graham  :  "RTRS- U.S. SELLS $16 BLN 30-YEAR BONDS AT HIGH YIELD 3.092 PCT, AWARDS 85.89 PCT OF BIDS AT HIGH"
Matthew Graham  :  "30yr auction expectations (when-issued) at 3.079. Looking for a bid-to-cover anywhere from 2.2 to 2.5."
Matthew Graham  :  "some folks sold some bonds, and then they bought some."
Matthew Graham  :  "simple, right?"
Joshua Crater  :  "will make sure I say this at least a few times today :)"
Joshua Crater  :  "Love this: So if anyone asks you why rates were marginally lower this morning, you can take 2 deep breaths and boldly declare "rates were a bit lower this morning because firms that had previously sold government bonds to hedge interest rate exposure during the corporate bond issuance process are now buying back some of those hedges." "