MBS MORNING: 10s Break 3.75 Support

The trend of rates market price weakness is extending to new levels at higher yields following the release of Philly Fed and Leading Indicators data.

The 3.625% coupon bearing 10 year TSY note is now -0-06 at 98-28 yielding 3.761%. That is above our 3.75% support level. Ruh-roh. We could really use a bargain bid from China at the moment, but they don't go back to work until next week. There was a brief rally after 830 data...that was a function of short covering though. 

 This is where we stand in regards to the post Dec.21 sell off.

Mortgage flows have been thin as many originators locked up yesterday (almost $2bn in 4.5s) while others still find it difficult to make a trade  with MBS relative valuations still super rich vs. benchmarks. The  FN 4.0 is -0-03 at 97-16 yielding 4.235% and the FN 4.5 is -0-03 at 100-18 yielding 4.441%. The secondary market current coupon is 4.42%. The current coupon yield is +68.4/10 year TSY yields and +58.9/10 year swap rates.

I am running late to a doctor's appointment...will be back after lunch. MG is on the watch.

If your lender priced early in the morning...you might get a reprice notice. If your lender just published...rate sheet rebate is worse.