MBS RECAP: 4 Reasons to Rally Lift Bond Markets

By: Matthew Graham •

Weaker data, slumping stocks, Iraq, and an awesome 30yr Bond Auction all helped Treasuries and MBS by varying degrees today.  The morning data's job was to arrest the drift toward weaker levels early in the day.  That mission succeeded.

Trading was sideways to slightly stronger from there, but was essentially unchanged by the time the auction rolled around.  After much stronger-than-expected results, the rally commenced in earnest.  During that time, extra 'oomph' potentially came courtesy of troubling headlines regarding Iraq and a fairly large selling-spree in equities markets.

By the end of the day, 10yr yields made it very close to the important technical level of 2.57 (2.5753 lows).  Eerily, S&P futures revisited their previous highs leading up to last week's ECB meeting.  The worse case scenario would be to see both yields and stocks making a strong bounce higher tomorrow, but if 10's are able to break below 2.57, it would confirm a technical shift away from the selling spree that began in late May.

MBS Pricing Snapshot
Pricing shown below is delayed, please note the timestamp at the bottom. Real time pricing is available via MBS Live.
MBS
FNMA 3.0
97-29 : +0-11
FNMA 3.5
102-01 : +0-09
FNMA 4.0
105-06 : +0-06
Treasuries
2 YR
0.4350 : +0.0040
10 YR
2.5969 : -0.0431
30 YR
3.4134 : -0.0556
Pricing as of 6/12/14 4:24PMEST
Today's Reprice Alerts and Updates
A recap of Alerts and Updates provided to MBS Live subscribers.
3:19PM  :  Another Leg Up For MBS; Positive Reprice Potential is Ongoing
1:10PM  :  Bond Markets Improve After Very Strong 30yr Auction
12:38PM  :  Slightly Weaker as 30yr Auction Approaches
10:47AM  :  Bond Markets Run to Best Levels; Approaching 3-day Highs
8:42AM  :  Bond markets back in positive territory after Retail Sales and Jobless Claims
MBS Live Chat Highlights
A recap of featured comments from the Live Discussion on the MBS Live Dashboard.
Matthew Graham  :  "actually, in terms of exponential moving averages, there was a death cross in late may and it would have been undone today if not for today's rally. All that said, death crosses only work when bonds are trending strongly in one direction with only minor corrections in the opposite direction. 2003 for 2007, wasn't so good for stuff like that. If yields end up moving higher this year, we'll be carving out a trend that looks much like 2003. "
Christopher Stevens  :  "Are we in a death cross? Just kidding...read a headline about that this morning and laughed"
Ted Rood  :  "I put out a positive reprice alert for our office at 12:30 central. Our secondary department just did a company wide one minutes ago. Score another point for MBS Live!"
Jeff Anderson  :  "Boom!"
Victor Burek  :  "with this site, we will always be ahead of lock desks"
Sam  :  "sweet!! glad to see supply out of the way...let the party began!"
robert clark  :  "He looked at what MG said."
Victor Burek  :  "A+"
Victor Burek  :  "nope, here he is"
Victor Burek  :  "santelli must be on vacation"
Matthew Graham  :  "definitely an A+"
Matthew Graham  :  "RTRS - U.S. 29-year 11-month bond BID-TO-COVER RATIO 2.69, NON-COMP BIDS $7.88 MLN"
Matthew Graham  :  "RTRS - U.S. SELLS $13 BLN 29-YEAR 11-MONTH BONDS AT HIGH YIELD 3.444 PCT, AWARDS 75.40 PCT OF BIDS AT HIGH"