TSYs Lose Bid as Stocks Test Session Highs. Reprice Risk Rising
10s are all over the place today. Prices have moved in a 20 tick range! (20/32) Yields have sunk as low as 2.661% (the low yesterday) and risen high as 2.73%. We're on the verge of a complete reversal of the AM rally.
The 2.625% coupon bearing 10 year TSY note is currently 8/32 cheaper at 99-09 yielding 2.708%.
Rate sheet influential MBS are holding up a bit better than TSY, but prices are still 6 ticks off the morning highs, when some lenders took down their indications. Loan pricing was pretty flat today, so there is room for a reprice for the worse, especially after the uber-aggressive behavior lenders displayed yesterday
The November FNCL 4.0 is currently -0-06 at 102-12. The October delivery FNCL 4.0 is -0-06 at 102-21. Spreads are off their wides (nominally). Prepayment anxiety remains high on recent vintage MBS coupons.
After two days of disconnection, the stock lever is influencing bonds (or is it the bond lever?). Stock futures are at session highs, part of the reason for the rates retracements illustrated above....