MBS RECAP: Strong Auction Offers Little Reprieve For Bonds


Posted To: MBS Commentary

There are two ways to approach today's bond market movements, and they're quintessential examples of the "glass half empty/full" expression. Glass Half Full: bonds rallied following the 30yr bond auction. 10yr yields remain under the most critical long-term inflection point at 2.50, and thus can still hope that it serves as a ceiling from which a rally can take shape into year-end. Glass Half Empty: bonds may have rallied after today's auction, but only because they sold-off aggressively from the morning hours. While we were hoping that last Friday's afternoon weakness was a temporary concession for the auctions, yields remain in line with those levels after trading both sides of them over the past 2 days. We didn't even attempt to return to Thursday's range…(read more)

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