MBS AFTERNOON: Already Strong Rally Gets Stronger

We were already familiar with the salubrious effects of AM data, Greek debt developments and overnight movements on the bond market.  Now, the additional gains that followed the 2yr note auctions may be solidifying at high support levels with the 10yr note decidedly under 3.71.  They were held up at 3.72 technical resistance leading up to the auction.  For MBS, the 4.5 is up 12 ticks on the day and looking for support in the 100-22 to 100-23 range.  Whatever the case, it's been a healthy rally, and has held up well to potential correction.

With nothing on tap as the day winds down, eyes are already turning toward tomorrow's auction as the next big driver and it seems logical to expect limited steam behind any run too far from the current range ahead of that, at least in the absence of negative surprises that would counteract today's positive ones.