MBS Day Ahead: Waiting For a Range Break, and 10yr Treasury Auction

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Posted To: MBS Commentary

To a significantly greater degree than yesterday's 3yr Treasury auction, today's 10yr auction will have the power to confirm a trend we were beginning to see at the end of last year. Namely, that investors had finally seen prices fall enough to make buying bonds seem like a good strategic move. What would confirmation look like? There are a variety of ways to assess the strength of an auction, but at 1:01:30pm ET, we'll be looking for the high yield to be below the 1pm " when-issued " yield. The when-issued (or "WI") 10yr is another version of 10yr Treasuries. Instead of the buyer receiving the bonds at purchase, they'll receive them when the next crop is issued, typically about a week after the auction. When-issued trading begins when a new auction is announced…(read more)

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