Bonds were feeling a bit defensive ahead of today's 7yr auction, and rightfully so! 7yr auction days have been rough in 2021. The past 3 examples were rough, in large part due to auction results themselves. Today was a bit different. The auction was actually decent. Bonds ended up selling off for other reasons. More details on those in today's video...
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Fed MBS Buying 10am, 1130am, 1pm
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FHFA Home Prices 12.2 vs 12.1 prev
Case Shiller Prices 11.9 vs 11.7 f'cast, 11.1 prev -
Consumer Confidence 121.7 vs 113.0 f'cast, 109.0 prev
Mostly sideways but slightly weaker overnight. Low volume/volatility. No standout market movers. 10yr yields starting up 1.5bps at 1.583. UMBS 2 ticks (-0.06) weaker at 103-16 (103.5).
Definitely favoring weakness ahead of the 7yr auction--almost exclusively seen in Treasuries. 10yr yields are up 2.5bps at 1.593% and 2.5 UMBS are down 3 ticks (-0.09) at 103-15 (103.47).
Nice, average results at 7yr auction, but only after a bit of AM bond market weakness helped soften prices. Not much movement since then with 10yr at 1.597 and MBS staying flat in a range between 1 and 3 ticks (0.03 - 0.09) weaker on the day.
Treasuries have weakened somewhat abruptly heading into the close with some traders citing a big corporate bond offering from Citi (why would that matter?). There's also a technical consideration as 10yr yields moved quickly up to the 1.62% level. Either way, MBS have avoided most, but not all of the drama with 2.5 coupons now down an eighth of a point on the day.
MBS Market Alerts
