MBS and TSYs Test Key Support Levels. Time to Pair Off

Ugh. After a few days of battling the inevitable, my hard drive has officially imploded. Going from three massive monitors to a tiny laptop screen is unpleasant. Blah.

Here is a quick market update while I get resituated...

10s are -9/32 at 98-28 yielding 2.755%. If 2.75% support fails to turn flows we might see 10s touch 2.80 again, but I think we'll see a reversal sometime soon, hopefully before 2.80. The 2s/10s curve is 3bps steeper at 227 wide.  The curve hasn't been this steep since early August, I'd expect to see some specs add flatteners ASAP. That would be helpful!

I bet secondary desks who were waiting to pair off a few hedges are now breathing a sigh of relief as production coupon prices are following benchmark TSYs lower.  The October delivery FNCL 4.0 is -0-04 at 102-11 and the November FNCL 4.0 is -0-04 at 102-02.

Just as 10s are testing a critical support level, so too are FNCL 4.0s. Time to pair off some Ginnie's...

Rebate will not be better today. This is the test we were expecting....