MBS MID-DAY: Moderate Pull Back Ahead of FOMC
Treasuries had a fairly uneventful overnight session--this time paying much more attention to the movement in European bond markets (not the case yesterday). It's somewhat significant, perhaps, that both US and German 10yr yields just barely failed to break late August lows. This is a closely-watched technical resistance event (i.e. failure to break to new lows is "bad").
Heading into the domestic session, Treasuries led the way back to the lows, but yet again, buying dried up before yields broke below the technical resistance. European bond markets (Germany is the benchmark) led the way toward higher yields from there. Unlike recent days with strong connection between stocks and bonds, equities markets have been playing catch-up today.
MBS have been faring a bit better than Treasuries, which is to be expected after underperforming during Treasuries' fast-paced rally. Fannie 3.5s started weaker, swung stronger, and have now returned near unchanged levels. 10yr yields are up 1.6bps at 2.357.
The afternoon events include the 10yr Treasury auction at 1pm and FOMC Minutes at 2pm.
MBS | FNMA 3.0 99-25 : -0-01 | FNMA 3.5 103-05 : -0-02 | FNMA 4.0 106-05 : -0-02 |
Treasuries | 2 YR 0.5080 : +0.0000 | 10 YR 2.3570 : +0.0161 | 30 YR 3.0680 : +0.0220 |
Pricing as of 10/8/14 12:43PMEST |