We’re seeing a thicker than normal volume of trading following the Fed’s scheduled buyback in the long end. The Fed clearly favored the shorter duration offerings (2036-2039), and left most of the 2040+ offers out to dry.
It’s not uncommon to see a bit of a whipsaw after scheduled Fed buying, but it normally hasn’t left us at the worst levels of the day as it is currently.
Fannie 3.5’s are down 6 ticks at 103-15 and bounced as low as 103-13. 10yr yields touched 1.98 and currently sit at 1.977. For lenders that priced early enough in the day, negative reprices are a risk.