MBS MID-DAY: 2/13/2012


Bond markets begin the week in slightly worse territory than Friday’s after Greek parliament voted to approve the austerity measures requisite for the country’s bailout funds. The overnight session was not especially brisk in terms of volume or volatility. Because the Greece news was out by Sunday afternoon, we simply saw a moderate pop of volume at the European open, but this only equated to 10yr yields rising from 2.0 to 2.026.

That’s because the passing of austerity, in and of itself, doesn’t guarantee that the next aid tranche will be released. That fate is set to be decided on Wednesday at a Eurogroup meeting, which is incidentally a follow up to last week’s similar meeting after Greece was unable to meet the austerity requirements to get approval.

MBS are holding their own in early trading with Fannie 3.5’s on the verge of breaking even on the day, currently down only 1 tick at 103-13. 10yr yields are 1.25bps higher than Friday’s latest levels at 1.9965. Despite a pull-back from overnight highs, SP futures are still roughly 10 points higher versus Friday’s close.

For the week’s full economic calendar, see “The Week Ahead” below:

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