MBS Outperform Amid Treasury Supply Pressure

Bonds made it through the overnight session without any major drama but selling intensified shortly after the 9:30am NYSE open.  We have little to blame for the weakness apart from the general desire to price in a concession ahead of the 3 and 10yr auctions.  Every bit of that was needed considering 10s still managed to come in slightly higher in yield versus the 'when-issued' target (effectively a running forecast of the auction outcome).  Without the same supply backdrop to worry about, MBS logically outperformed.  Looked at another way, MBS outperformance helps confirm the market's focus on Treasury supply.  CPI is out tomorrow morning.

Econ Data / Events
    • Jobless Claims
      • 261k vs 235k f'cast
Market Movement Recap
10:37 AM

Mostly sideways overnight. Stronger at 8:20am. Weaker at 9:40am.  10yr up 4bps at 3.782.  MBS down 10 ticks (.31).

01:03 PM

Decent bounce back for MBS while Treasuries remain under pressure.  10yr up 4.7bps at 3.79.  MBS down an eighth of a point.

02:43 PM

MBS outperforming with 5.0s down only 1 tick (.03) and 5.5s up 1 tick.  10yr still up 2.4bps at 3.767.

03:26 PM

Additional outperformance and broader bond market gains.  10yr down 1.9bps at 4.577.  MBS up an eighth of a point.