More Outperformance as Treasuries Fret Over Auctions

Welcome to day 4 of our unofficial 9 day weekend with limited data and volatility ahead of an actual 3.5 day weekend.  Is data truly limited if we have Durable Goods?  Perhaps not entirely...  There was a small but noticeable reaction this morning to the stronger result (1.4 vs 1.1). 

But because bonds were only slightly stronger overnight, the slip to modest weakness ends up making things look pretty flat in the bigger picture. 

MBS continue outperforming Treasuries as the latter are being a bit more defensive during the auction cycle.