MBS LUNCH: $42 Billion 5 Year Note Auction Results

As of right this very moment, there has been no negative response to the recently released auction results.  This places the brunt of the potential volatility today on the FOMC statement which comes at 2:15, but can vary by several minutes.

As for the auction, the 2.80 Bid-to-Cover ratio was good, and with $22 bln+, indirect bids were a bit stronger than recent sub-50% auctions.  The high yield at 2.37 with 45% taken at the high is one of the weaker points, and as was the case last week, the dealer hit rate (% of bids accepted from primary dealers) was much higher than average. 

If we get any significant movement in either direction between now and the FOMC, we'll let you know ASAP.  All previous DEFENSIVE thoughts remain.  Be ready to lock if prices head south...