MBS RECAP: Bond Markets Drift Into 3-day Weekend; MBS Underperform

Bond markets limped across the finish line near the lowest levels of the week.  As expected, there was no major drama and the only real unpleasantness was the moderate underperformance on the part of MBS due to a heavy day of origination supply.  Even then, the same thing can be said for both MBS and Treasuries: today's range was narrow, slightly stronger than Wednesday and notably weaker than everything before.

The morning data was fairly uneventful, though we're left to wonder if that would have been the case if it was unified in its message.  As it stands, 2 of the reports were slightly stronger (Imports/Exports and Consumer Sentiment) while one was exceptionally weaker (Industrial Production).  It was the weak report that garnered the biggest reaction (or "only" reaction, as the case may be), but it wasn't enough to get MBS or Treasuries back into positive territory.  As such, we're left to consider whether the negative predisposition has a meaning or if bonds just targeted the most neutral zone possible ahead of the 3-day weekend.  With 10yr yields smack dab on their 21-day moving average, probably the latter.