MBS Day Ahead: Yellen Circus Sending in Clowns; Brexit Countdown Shrinks; Last Auction

• Yellen's congressional testimony moves to House Financial Services Committee--always a "good show."
• Bond markets consider leveling-off ahead of Brexit decision 
• End of the week's Treasury auction cycle (maybe informative--probably not)

If you like trashy reality TV--especially the kind where the idiocy of the show's participants has you worked-up to such an extent that other people no longer wish to watch the show with you, then today's Yellen testimony is right up your street.  She's with the House Financial Services Committee, which seems to be comprised of a carefully chosen spectrum of personalities and intellects.  Some of them are pretty OK while others will frustrate the average viewer to the point of throwing things at the screen.  Yellen would throw things too, but isn't eager to add any fuel to the anti-Fed fires that already burn for several representatives.  

Considering we've already seen Yellen's prepared speech (today's will be the same as yesterday's), only the Q&A can offer up any new news.  On these 2-day testimonies, day 2 tends to simply reiterate day 1, so no new news is expected, but markets will be tuned in, just in case.

In the bigger picture, yields look to be leveling-off right at the lower end of the previous range (which is about where you'd think they would be in order to position for tomorrow night's Brexit vote).  In other words, the bond rally got a bit overheated amid last week's Brexit-related frenzy, and has since cooled off by a logical amount.  Trading levels and technical momentum measures are suggesting bonds are ready to digest Brexit and move accordingly.  "Leave" = lower rates and "Remain" = higher rates, all other things being equal.

On a final note, today is the last Treasury auction of the week.  To whatever extent this week's bond market supply has added to the pull-back, we could see modest improvements after 1pm, regardless of the outcome of the auction.