MBS CLOSE: Afternoon Brings No Surprises As Bonds End Weak

After meeting some support earlier this afternoon, MBS and Tsy's both, were able to hold onto it through the close today.  For MBS, that was a 3 tick loss to 100-19--not too bad, but it seems that way considering the settlement drop yesterday.  Treasuries were a bit weaker as yields on the 10yr backed up from 3.64 to 3.69, ostensibly drawing on 3.70 range support. 

As you know, prices and yields in this environment tend to make their day to day movements with tradeflows, data, and events being the driving force, but always against the backdrop of various technical levels.  In other words, markets do a decent enough job of providing CAUSES for what we witness on the charts as EFFECTS in terms of MOVEMENT, but in terms of where those movements like to end the day, or even find support or resistance intraday, technical levels seem to have been the better explanation for quite some time.  All that to suggest the importance of the next chart for MBS:

OK, If this chart didn't speak to you, here's what it told me.  Things were looking pretty good  in the late half of January where the 4.5 traded ABOVE the mid december low (before the sell-off).  But with the combination of Settlement adjusting prices on our front-month indicator and a modicum of ongoing weakness in the broader rates market, we're through that 100-27 support level which has basically held firm until now.  The next support we'd look for would be near Jan. highs, or some narrow band of prices around 100-17.  The fact that we went out there today isn't quite as significant as the fact that this was also the price level around which we can see intraday resistance form in the first chart. 

Yes yes yes...  I know that prices broke that support after the auction, but you'll forgive MBS as I do, for about an hour following most treasury auctions.  The directionality and volatility of that window of time is only sometimes indicative of the bigger picture.  Factoring out that chop chop, and things would look almost mathematically focused on the support level by comparison: 

HYPOTHETICAL CHART:

When you see this sort of text book inception of a parabolla, it is sometimes the early formation of directional cues for the following day.  Sadly, that often assumes a relative vacuum of data and events.  And although the Retail Sales report is snowed out and tentatively rescheduled for Friday, the 30yr auction keeps it's appointments.  Perhaps not as germane to the MBS picture, but important fodder for the curve to digest. nonetheless.  (Ha!  Try explaining THAT one to the MBS neophyte...  "So you're telling me that my 30yr mortgage rates have more to do with a 10yr bond than a 30yr bond?!"  

Beyond that, there's the standard issue Jobless Claims at 830, and the normal Thursday afternoon data with Fed Balance Sheet (including MBS purchases), and Money Supply