MBS OPEN: Green Dream Still Alive As A New Week Begins
Friday, of course, saw a major rally for MBS and Treasuries, which is discussed in detail in the most recent post below. One exciting aspect is the fact that we crested the original floor of the "Age Of The Fed in MBS-Land." at 100-21 in 5.0's. Interesting how that happened the same week markets turned away yield raptors at 4.0% on the 10 yr, in some ways signifying, "yes fed, you HAVE made a difference."
As trading kicks off for the day, all the positivity that made it's way to MBS by the time the last trades came across is still intact with 5.0's over that 100-21 level at 100-25. For all prices, always see:
There's a moderate suggestion of some resistance at our current levels, so breaking that early would be a good sign for the rest of the day. If things get ugly, the support to watch would come from the higher low uptrend represented by the bottom line here:
Tsy's are facing a similar suggestion of a technical floor for yields after having a similarly bullish Friday. As has been the case, our fates should be relatively tied today, however, spreads have gapped a bit in early trading, a phenomenon which--if it continues--could provide some extra buying "oomph" for MBS (since they'd be relatively cheaper than Friday). For the 10yr yield, the range suggested by technicals looks to be somewhere north of 3.76 and south of 3.81. MBS bulls will be hoping for an early break on the downside.
Especially considering these few positive signs at this hour, "defensive optimism" remains the order of the day. If you didn't catch it, the latter portion of the previous post discusses potential optimism and tempers it with the "defensive" caveat. Written on Friday, but perfect for this AM...
2s/10s: 252bps
6/12 EFFECTIVE FED FUNDS: +0.00 to 0.17 from 0.17
LIBOR FIXINGS
O/N LIBOR: +0.0012 to 0.2612 from 0.2600
1 MONTH: +0.0006 to 0.3187 from 0.3181
3 MONTH: -0.0100 to 0.6144 from 0.6244
6 MONTH: -0.0150 to 1.1688 from 1.1838
1 YEAR: -0.0337 to 1.6988 from 1.7325