MBS UPDATE: AUCTION REACTIONS

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The 10 yr note auction results are in.....until new trends develop one should assume the MBS stack will be more susceptible to selling as spreads tighten. Currently the short end of the stack is wider...5.5s through 6.5s are tighter.

120pm Marks (since 3pm Close...)

FN30_________________________                            

FN 4.5 -------->>>> +0-06 to 101-03 from 100-29                                       

FN 5.0 -------->>>> +0-05 to 102-00 from 101-27                                   

FN 5.5 -------->>>> +0-05 to 102-15 from 102-10    

FN 6.0 -------->>>> +0-04 to 103-05 from 103-01                                        

GN30______________________

GN 4.5 -------->>>> +0-05 to 101-17 from 101-12

GN 5.0 -------->>>> +0-05 to 102-17 from 102-12

GN 5.5 -------->>>> +0-03 to 102-27 from 102-24

GN 6.0 -------->>>> +0-02 to  103-11 from 103-09

Here is the auction press release: LINK

Bid-to-cover: 2.21

Anytime demand is better than 2.00 (2:1 auction demand) one can consider the auction a success. In this case the unknown political variables may have lessened demand a bit.I would describe the results as....not great..not horrible.

High Yield: 2.818% vs. 2.67% at last UST10YR auction

Overseas bidders took almost 38% vs. 13% at the last UST10YR auction

Here is how the Yield Curve and Stocks reacted....