MBS LUNCH: 7 Year Treasury Auction Results

Just wanted to get you the basics, and let you know the first move for MBS has been to the upside, as tsy's have improved a little as well.  Stay tuned for any changes to that outlook however as post auction tends toward volatility

7-YEAR NOTES
 
YIELDS
    High                       3.078 pct
    Median                   3.050 pct
    Low                        2.900 pct
PRICE/ACCEPTANCES
    Price                      99.512216
    Accepted at high         9.60 pct
    Bid-to-cover ratio            2.98

AMOUNTS TENDERED AND ACCEPTED (dollars)
    Total accepted                                32,000,012,700
    Total public bids tendered                95,420,168,700
    Competitive bids accepted               31,964,824,000
    Noncompetitive bids accepted                 35,188,700
    Fed add-ons                                       786,456,600
   
    Primary Dealer Tendered                 65,176,000,000
    Primary Dealer Accepted                  13,569,000,000
    Primary Dealer Hit Rate     20.8% of what they bid on
    Primary Dealer Total Award      42.4% of total auction
   
    Direct Bidder Tendered                    12,482,680,000
    Direct Bidder Accepted                       5,505,680,000
    Direct Bidder Hit Rate        31.1% of what they bid on
    Direct Bidder Total Award         17.2% of total auction
   
    Indirect Bidder Tendered                 17,726,300,000
    Indirect Bidder Accepted                  12,890,144,000
    Indirect Bidder Hit Rate     72.7% of what they bid on
    Indirect Bidder Total Award      40.3% of total auction
 
 
NOTE DETAILS
    Issued date    March 01, 2010
    Maturity date  Feb. 28, 2017
    CUSIP number   912828MS6

 

UPDATED AT 2PM

The initial move after the auction results came out was to the upside for both MBS and Tsy’s.  But the better-than-average results were not quite enough to get either market through some overhead resistance (keep in mind that’s “underfoot” resistance if we’re looking at YIELD as we do on treasury charts).

As such, 4.5’s look to be getting the wind taken out of their sails right around the 101-00 level whereas treasuries are getting capped by the long-term, and quite epic 3.62 yield which was basically the highest level reached throughout nearly all of Q309. 

So with that, the likelihoods for reprices for the better are decreasing, and attention turns to that with which we’re so familiar: “range-tending.”  Meaning, we’re now decidedly back in the days range suggested by highest and lowest levels of the day so far.  If we move out of that range, it may be time to perk up and watch out for increasing risks of reprices for the worse.