MBS AFTERNOON: Slow Decline Back Toward Par

Has AQ shared with you guys already that there is not much to say about the market at the moment?  That continues to be the case.  Data is non-existent and volume is pathetic.  After seeing some AM short covering that brought the 10yr yield down 3.69.  Volume takes a noticeable vacation and the bid-side of the market went with it.  So sellers soliciting bids were met with more than a few answering machines, vacation messages, and out-of-office replies, figuratively speaking of course.

So, the less demand on the bid side of the equation, the more yields have the room to back up regardless of volume.  In other words, there isn't some significant amount of "selling" per se, but more appropriately, just no buying.  This phenomenon has led both MBS prices and tsy yields more or less in line with their worst levels of the day yesterday.  Considering that those were also the closing levels, that puts the 4.5 up a mere tick to 100-01 and the 10 yr tsy up a tick at well, good for a yield of 3.754.

You can see in the charts that this is noticeably worse than the AM levels, but as mentioned, in line with yesterday's weakest levels.

Don't expect much to change before the close...