MBS OPEN: Durable Goods Report Has Paradoxical Effect On MBS

By: Matthew Graham •

The AM So Far...

  • Tsy futures were down slightly overnight, but have since met yesterday's lowest levels
  • Durable Goods up 4.9 versus +3.0 consensus
    • Last print was down 1.3
    • excluding transportation + 0.8 versus +0.9 consensus
    • Largest Rise since 7/07
    • mostly non-defense aircraft (thanks boeing)
    • Defense Aircraft drags on numbers (-18.8 pct)
    • Largest rise since 7/07 excluding defense
  • MBS up 2 ticks at 100-13
  • bond strength either shows disregard for fundamentals or shows extent of consessionary hedging ahead of auctions

Recap of Previous Session

  • Prices disregarded funamentals as well yesterday
  • range narrowed in an ultra-technical pattern leading into auction.
  • range shot upward in an ultra-technical pattern leading out of auction (that's ultra technical, not ultra aggressive)
  • Stayed within established range however.
  • No support for higher prices from tsy futures

In The Time It Takes To Type

  • nada

The Day Ahead

  • Where to begin....  Lots of news coming our way
  • none of it matters though until 1pm Auction
  • no...  seriously...
  • you're still waiting for me to admit hyperbole above?
  • won't happen...