MBS LUNCH: Mid-Day Surge Moderating But Staying Positive

Shortly after noon, MBS and Treasuries went on a mini-tear that saw 4.5's challenge their best levels from last week and the 10yr note dip back in to the 3.6's.  At the moment, 4.5's are up 3 ticks on the day at 101-01.  Despite moving up to 3.72 this AM, the 10yr is about 3bps better on the day from 3.697 to 3.677. 

Those numbers should give you an idea of just how shallow the seemingly spiky rally is in terms of outright price, but in addition to that, AQ did a good job discussing the shallowness of volumes as well in MBS Morning. 

And aside from the fact that the chart above shows treasuries merely falling in line with previous session low yields, the MBS rally can be framed fairly easily with only a slightly wider view.

Moral of the story: gains are gains and we'll always take 'em, but beyond the extra shot in the bond market's morning latte, there's not much more to this one as far as the big picture.  If anything, we'd be looking for tsy's to break 3.67 in order to adopt any sort of outright bullishness.  If you want to equate that to MBS, 101-04 is a perennial favorite for topside resistance.