MBS AFTERNOON: Rates Sideways in Slow Trading. Warning Attached...

Yawn.   As expected markets are thinly traded ahead of the looming FOMC meeting.

The 3.375% coupon bearing 10 year Treasury note has bounced back and forth around the 3.62% pivot all day. Trading volume is well below average with the March 10yr contract seeing 512,000 trades up to this point. In the chart below you can see how the cash market has stuck close to 3.62%. You could consider this a holding pattern until market moving data or information hits wires. Waiting for direction....

The "rate sheet influential" FN 4.0 is -0-07 at 97-23 yielding 4.218% and the FN 4.5 is -0-04 at 100-27 yielding 4.422%. The secondary market current coupon is 4.391%. The current coupon yield is 76 basis points over the 10yr TSY yield and 65bps over the 10 yr swap rate. Mortgages are playing follow the leader with benchmark big brother. Again...this is a thinly traded marketplace ahead of the FOMC meeting.

MBS prices are just above the lows of the day....blaaah

Remember, thinly traded markets are always susceptible to "shocks"...meaning if one trader tries to work a large order too fast, the marketplace may not react well. When trying to pick LOCK or FLOAT....I am still favoring LOCK.

UPDATED AT 4:15PM...

The FN 4.5 is -0-02 at 100-27....still sideways, still slow.