MBS MID-DAY: In Positive Territory, but Off The Highs Ahead of 30yr Auction

It's been a mostly good morning for bond markets.  The overnight session saw modest gains during European hours, and Treasuries even managed to hold those gains while European bonds sold-off.  That's not a common occurrence and especially not on a day with a Treasury auction on tap.

The outperformance probably would have faded in the domestic session if not for the exceptionally weak Retail Sales numbers.  That gave Treasuries and MBS a solid boost, but both were only willing to bounce briefly at resistance levels (101-16 in Fannie 3.0s and 2.05 in 10yr yields).

Since then, trading levels have drifted back toward support levels (2.096 in 10yr yields and 101-08 in Fannie 3.0s).  The 30yr auction will likely determine whether those are held or broken.