MBS Print New Session Price Low. Short Sellers Dictating Direction

This post is more of an FYI as opposed to an alert. If you're floating I would not recommend locking at this point in the retracement process.  Wait it out...

The long end of the yield curve is getting beat up by profit taking and tactical short selling today. Investors appear hesitant to add new long positions with more auction supply ahead, a steady stock rally in progress, and the FOMC meeting still another eight days away.

The 2s/10s curve has steepened 4bps up to 225bps wide. The 10yr note is -19/32 at 99-28+ yielding 2.636% (+6.9bps). Rate sheet influential MBS coupons just hit new intraday lows as a result. The December FNCL 3.5 is currently -0-13 at 100-02 and the FNCL 4.0 is -0-09 at 102-20. Yield spreads are tighter on the spot.

The FNCL 3.5 has broken three support levels and is now testing a fourth. Pairing off is looking good. Anyone buying back hedges?

Loan pricing is 49.9bps worse than it was yesterday morning with the largest rebate reductions seen in note rates at and below 4.25%. This makes sense as the 3.5 MBS coupon is down a full point in the last two sessions.   Reprices are still possible but like I said above I would be floating for November 3rd at this point.