MBS MID-DAY: MBS Slightly Weaker, Treasuries Slightly Stronger

The only economic data reported this morning was Import/Export Prices, which gives investors a gauge on inflation. Import prices posted a better than expected drop of only -.5% compared to expectations of a -.7% decline. Export prices posted a worse than expected drop of -.2% vs -.01% expected. The results were close enough to consensus to trigger no response from the bond markets.

MBS and Treasuries opened in opposite directions this morning. MBS are currently down a few ticks from yesterday’s post roll close of 103-06 while the benchmark 10year note is currently down from yesterday’s close of 2.32 to 2.30.

MBS are off their lows by a couple ticks which should eliminate any reprice risk for now. With a 3 day weekend approaching, lenders might be a little more aggressive in repricing for worse if MBS fall below this morning’s low of 103-01.

As a reminder, both the US stock and bond markets will be closed on Monday due to Columbus Day.