MBS RECAP: Another Resilient Day Despite Stronger Data

While not all the data was stronger this morning, the only stand-out market mover certainly was.  Jobless Claims fell to 311k from 320k previously, beating a 325k forecast.  Instead of paying much attention to the data, bond markets continued marching calmly into positive territory after opening at just slightly weaker levels.  Weaker Pending Home Sales raised no objection at 10am and bonds were soon putting in a repeat performance of yesterday with a consolidation around the best levels of the day heading into the Treasury auction.

The repetitive movement continued as a stronger auction gave way to more afternoon strength.  It wasn't quite on the same scale as yesterday's 5yr Auction, but enough to help MBS hold their gains and for Treasuries to improve slightly on theirs (10yr and 30yr yields anyway).  The second round of strength finally brought a moderate amount of reprices in the afternoon, leaving rates at the best levels of the week, but not yet back to last week's best.