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MBS RECAP: 3 Times in a Row: Auction Week Bringing The Weakness

Posted To: MBS Commentary

3 Times in a Row: Auction Week Bringing The Weakness Bonds have been consolidating in roughly a 17bp range centered on 10yr yields of 1.30%. During this consolidation phase, yields have hit the ceiling (1.37+) 3 distinct times. Each of those bounces corresponds with a Treasury auction cycle. 2 of the 3 examples include follow-through momentum from a poorly received jobs report (with this week being one of the 2). There's no way to know if the same pattern (the one where bonds turn a corner and calm down by the end of the week) will play out this time, but the stakes appear to be higher with yields already knocking on the 1.37+ ceiling. Econ Data / Events Fed MBS Buying 10am, 1130am, 1pm Market Movement Recap 08:41 AM Bonds weaker on supply ramp-up (corporate bonds + Treasury auctions)….(read more)

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