Decent Resilience in Spite of a Few Headwinds

Considering the volatility that may lie ahead, Monday ended up being a calm and decent start to the week.  The ostensible overnight headwind was the rumored currency intervention by the Japanese government.  In the past, this has caused heavy selling in Treasuries, but that wasn't the case.  As such, this wasn't really a headwind.  The more legitimate challenge came in the form of higher borrowing estimates from Treasury this afternoon.  Bonds actually did a good job of taking that news in stride, but nonetheless moved to weaker levels.  It was a bigger problem for MBS due to the way they relate to the Treasury yield curve these days.

Market Movement Recap
10:14 AM

Moderately stronger overnight, but pulling back a bit.  10yr still down 2.4bps at 4.64.  MBS up an eighth.

11:48 AM

Some two way volatility with gains into the 11am hour and a small pull-back now.  MBS up 3 ticks (.09) and 10yr down 3bps at 4.634.

01:24 PM

Slightly stronger.  MBS up 5 ticks (.16).  10yr down 4.8bps at 4.617.

03:40 PM

Moderately weaker after Treasury refunding estimates.  MBS at lows, but still up 2 ticks (.06) on the day.  10yr yields down 3.7 on the day at 4.628.