MBS MID-DAY: Outperforming As Treasuries Head For Sidelines


With all of the potential market moving events mentioned in The Day Ahead having come and gone, bond markets moved from a flat Asian session to a slightly weaker European session.

The weakness continues now in the domestic session, and is currently contending with a small risk rally after the ECB loosened ratings requirements for asset-backed securities. The Euro experienced it’s biggest spike of the session. Equities followed, and bond markets are doing their best to hold underneath earlier morning weak spots, but look like they might be failing presently

10yr yields were as high as 1.6588 earlier this morning but just now broke above 1.66. There’s additional overhead support at 1.69, if things continue to deteriorate. Fannie 3.5’s are down 5 ticks on the day at 104-29 as are 3.0’s at 102-13, noticeably firmer to Treasuries

There are no significant events left on the calendar for today, so it’s either headline-watching or setting up for next week’s supply.

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