MBS MID-DAY: Slight Weakness Ahead Of Auction, But Still An "Inside Day"

MBS Pricing Snapshot

Once again, we're coming off an overnight session that saw limited volume and volatility compared to what one might hope for in the wake of last week's big shake-up. At least the small amount of movement seen, has generally been in a friendly direction.

Overnight 10yr yields made it only as high as 1.89 while equities futures continued to grind against the same highs as yesterday's pre-market session. 10's hit the domestic session essentially unchanged, and for all intents and purposes continue to be unchanged from 5pm levels at 1.867. MBS had been perfectly unchanged until the past few minutes brought Fannie 3.0s down 2 ticks on the morning to 104-11. Even so, this is well within the narrow range set up between yesterday's 10AM highs and afternoon lows (a scant 4 ticks from 104-11 to 104-15).

There are no significant pieces of data out this morning, though a Fed "Twist" buyback will begin at 10:15, finishing at 11:00am. The biggest event of the day for Treasuries will be the 10yr Auction at 1pm. The headline alludes to the possibility that bond markets are rangebound in anticipation of that auction. We'd emphasize "possibility." All we can say about it now is that it's "the next big thing," and while it could be the biggest motivator of the week so far, there's no guarantee it will be.