Since mid-day on Monday, domestic bond markets hadn't done much at all.  Despite a slightly expanding range, the momentum was sideways as both higher highs and lower lows were being made.  It wasn't until today that yields finally took a significant step outside that mostly-sideways range.  Unfortunately, it was a step in the wrong direction.

The easiest place to point fingers is at the 30yr Bond auction.  Objectively speaking, that's not a bad way to go, considering the mostly-sideways range was still "mostly intact" until then.  It may well have been the case that a stronger auction would have kept it intact.  Instead, the auction was exceptionally weak, even though bonds had already weakened in the run up to it. 

Auctions give investors a chance to see where other investors stand in a slightly clearer light than normal everyday trading.  Today, traders saw that wasn't much willingness to buy longer-dated Treasuries even after the morning's concession made yields more attractive.  A relatively high level of uncertainty as to the next inspiration for bond markets combined with the ongoing liquidity problems made for a swift reaction to the auction data.  While the weakness quickly found support and managed to hold it for the rest of the day, it was a full 7bps higher in 30yr bonds, 6bps higher in 10yr yields, and ultimately translated to 6/32nds of price weakness in MBS.


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
102-09 : -0-06
FNMA 3.5
105-01 : -0-05
FNMA 4.0
106-26 : -0-03
Treasuries
2 YR
0.5520 : +0.0160
10 YR
1.9650 : +0.0590
30 YR
2.6000 : +0.0700
Pricing as of 4/9/15 4:58PMEST

Today's Reprice Alerts and Updates
A recap of Alerts and Updates provided to MBS Live subscribers.
1:04PM  :  ALERT ISSUED: First Move is WEAKER Following 30yr Auction; More Reprice Risk
12:50PM  :  ALERT ISSUED: Negative Reprices Increasingly Likely
10:22AM  :  ALERT ISSUED: Modest Increase in Negative Reprice Risk
9:26AM  :  Auction Concession Outweighs All-Time Lows in Europe; MBS Outperform

MBS Live Chat Highlights
A recap of featured comments from the Live Discussion on the MBS Live Dashboard.
Matt Hodges  :  "Alan: if FHA will do it, make sure you have an investor who won't overlay. WF was my last no fico lender, and they don't do them anymore"
John Tassios  :  "Yes, if he has rental in his name, that would be big help. plus utilities, cell ph, etc."
Alan Craft  :  "FHA ? Man and wife applying together. He has no scores. She is 680. Do I have to establish alt credit to use his income?"
Matthew Graham  :  "D"
Matthew Graham  :  "RTRS- PRIMARY DEALERS TAKE 41.77 PCT OF U.S. 29-YEAR 10-MONTH BONDS SALE, DIRECT 6.97 PCT AND INDIRECT 51.26 PCT"
Victor Burek  :  "not looking good"
Matthew Graham  :  "RTRS- U.S. 29-YEAR 10-MONTH BOND BID-TO-COVER RATIO 2.18, NON-COMP BIDS $8.23 MLN"
Matthew Graham  :  "RTRS - U.S. SELLS $13 BLN 29-YEAR 10-MONTH BONDS AT HIGH YIELD 2.597 PCT, AWARDS 40.72 PCT OF BIDS AT HIGH"
Matthew Graham  :  "30yr auction coming up. Last 3 have been higher than expected in yield based on 1pm 'when-issued.' That's currently running 2.57. Bid-to-cover has been weak recently, ranging from 2.18 to 2.32. Indirect bidders have been fairly steady in the 45-50% range. For these jargon terms and more: http://mndne.ws/1gIJmzh"