MBS CLOSE: Prices Decline All Day, Still End Up in Green

In terms of DAY-OVER-DAY change, MBS gained 7 ticks in 4.5's and 4 ticks in the adjacent coupons, bringing prices to 99-09, 102-01, and 104-19 in 4's, 4.5's, and 5's respectively. 

But as far as the majority of the days directionality, it felt a lot more like a "down day."  Maybe that's because it looked more like a down day as well.  Major price positivity was concentrated at the open and only lasted 2 hours.  From there, it was a slow, range-bound trickle back towards 102-00, even if the tsy auction would like you to believe otherwise.

Tsy's did a bit better perhaps, with the 10yr note up 11 ticks bringing the yield to 3.388.  Though perhaps slightly above 3.380 proper, we've seen 3.38+ quite a few times in recent months as we've tracked the inflection near these yields.  In other words, "close" not only counts in horseshoes and hand grenades, but for today at least, also in the assessment of range-trading behavior in 10yr yields.  Who knows!  Perhaps it's always been that way, but the idiomatic expression was thought to catch on better in a shortened version! 

Yes... that's probably it...

Zooming out to more of a 3 day view gives us a better sense of the inflection in tsy's, as well as the "down day" in both markets.  We also see a vote for a high 101's pivot point in MBS as AQ mentioned in the most recent post.

It's interesting to me that the 3 year auction is barely noticeable from a volume perspective.  Perhaps it's not so "interesting" as it is "suggestive" of the possibility that tomorrow's auction will hold more water, or even that which we've seen several times recently in that thurday's auction, though probably not as interesting as the 10 year, carries as much or more weight simply because it's the last shoe to drop.

Taking things one day at a time, we'd have to point out that we're once again closing over 102-00...  For any you're floating into tomorrow, pay close attention to any AM stability or other factors leading to advantageous rate sheets as that may help you adjust the lock/float ratio a bit before the 1pm coin-toss.   At least it's a 3 sided coin...

Wholesale Trade at 10am, and of course, the Wednesday standard-issue MBA applications survey, which is once again showing refi's reaching for a 70% share of the pie! $21 billion 10s at 1pm.