MBS and Treasuries End Session Near Best Levels of Month

• 4.5's up 19 ticks to 100-03
• 10yr Tsy yields down almost 10bps to 3.861
• No major instances of profit taking or correction
• 10yr auction too strong to even explain in words
• all hands on deck...  Float boat still sea-worthy

I gotta tell ya...  It was agonizing the past few days to try to stay true to our assumptions about "playing the range until it plays you" as things got uglier and uglier, but if a THREE POINT SEVEN ONE(!!) bid to cover and 99% of auction bids getting taken at 3.90% isn't a reassuring verdict, I don't know what is.

The world asked if it was time to see 4%+ on the 10yr, and the market's answered:

MBS had been outperforming treasuries in the AM, but as expected, they widened into the rally.  This doesn't mean they didn't rally, just not quite as much as treasuries. 

Tons of Fed Speak tomorrow, as well as Jobless Claims early, and the 30yr auction at 1pm. 

As far as locking and floating, I'd probably take certain deals off the table if I promised some higher power that I would do so if they could just help me save my shorts, but if I had just taken the app today, I'd be too curious and optimistic about  even an "as expected" 30 yr auction suggesting a retest of 3.85 levels in the 10yr.  If it doesn't look like things are headed that way by tomorrow night, you'll very likely have an opportunity to get out before big trouble, even if there is a small cost of admission.