MBS RECAP: Bond Markets Battle Back to Green After Weaker Open

• Bonds opened weaker as Yellen's Friday comments reverberated
• data was largely ignored
• Bonds rallied after Brexit poll and technical ceiling in 10yr yields

10yr Treasuries have been holding a very tidy, very sideways range for 8 straight days now (that's every single session since the FOMC Minutes, for what it's worth).  During that time, they never moved above 1.89.  Today marked the closest call with that upper boundary as domestic traders joined the bond market sell-off already in progress early this morning.

Not only did the range end up holding, but bonds soon found reason to rally.  While we can assume that some sponsorship came courtesy of the month-end trading environment, the more readily-apparent culprit was a newswire regarding a new poll on the likelihood of Brexit (UK leaving the European Union).  The Fed itself has already said that increased Brexit risks make a June rate hike less likely, and markets weren't shy about responding accordingly.

European bond markets led the way toward lower yields with US markets following.  10yr yields fell fairly quickly from 1.89 to 1.85, and then spent the rest of the day grinding down to lows of 1.83% by the 3pm close.  That's the point at which 'month-end' bond buying would have its fullest effect.  Accordingly, the rally backed-off a bit into the 5pm 'after-hours' close.

MBS did a fairly good job of following the Treasury move, and as usual, were only making smaller version of the movement seen in Treasuries.  MBS managed to make it back to +3 ticks on the day after being -5 ticks at the morning lows, resulting in numerous lender reprices this afternoon.