MBS MID-DAY: Bond Markets Battle Back from Opening Weakness

By: Matthew Graham

To whatever extent liquidity still exists in the bond market, it returned today after holiday-related absences reduced participation to the lowest levels of the year over the past 2 sessions.  You might even say it returned with a vengeance, quickly seeking to perpetuate the unwinding of the post-NFP rally.  Fortunately, those vengeful urges were quickly sated--a fact that's all the more welcome considering the approaching Treasury auctions (which would normally suggest bonds err on the side of weakness leading up to the auction results).

The takeaway is that whatever weakness had been waiting in the wings for bonds, has now run it's near-term course.  Take note though, "near term" refers only to today.  While it's not as potent as the week's remaining auctions, today's 3yr could still motivate some movement.  Additionally, tomorrow is a new trading day with new considerations (including FOMC Minutes).  For now though, 1.928 is today's technical ceiling in 10yr yields and MBS found solid support at 102-08 (Fannie 3.0s).  That can now be watched as a line in the sand for negative reprice risk.


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
102-11 : -0-03
FNMA 3.5
105-03 : -0-02
FNMA 4.0
106-28 : -0-02
Treasuries
2 YR
0.5200 : +0.0200
10 YR
1.9090 : +0.0100
30 YR
2.5540 : -0.0030
Pricing as of 4/7/15 12:32PMEST

Morning Reprice Alerts and Updates
A recap of Alerts and Updates provided to MBS Live subscribers.
11:01AM  :  ALERT ISSUED: On The Edge of Negative Reprice Risk (Emphasis on "Edge")
9:41AM  :  Significant Tradeflow Activity at CME Open; Bonds Weaker at First

Live Chat Featured Comments
A recap of featured comments from the Live Discussion on the MBS Live Dashboard.
Matthew Graham  :  "RTRS- KOCHERLAKOTA: THERE IS EVEN A THEORETICAL ARGUMENT TO BE MADE FOR MAKING ASSET PURCHASES NOW"
Matthew Graham  :  "RTRS- KOCHERLAKOTA SAYS U.S. NEEDS THREE MORE YEARS LIKE 2014 TO GET BACK TO FULL EMPLOYMENT"
Matthew Graham  :  "RTRS- KOCHERLAKOTA: FED SHOULD DEFER FIRST RATE HIKE TO SECOND HALF OF 2016"
Matthew Graham  :  "RTRS- FED'S KOCHERLAKOTA SAYS SHOULD BE EXTRAORDINARILY PATIENT ABOUT REDUCING ACCOMMODATION"
Matthew Elston  :  "620, but if you don't have 640 it will be a battle to get them approved"
Matt Hodges  :  "Does USDA have a 620 or 640 minimum? I haven't done one in a while and i have a 629 middle"