Yields Find a Floor Ahead of Month-End and Long Weekend

Today's most notable feature was a paradoxical move toward higher yields immediately following a strong 5yr Treasury auction.  There was nothing in the auction results that would allow the weakness to be rationalized and there were no other overt market movers at the time.  We're left to conclude this is a byproduct of traders circling the wagons as Friday's month-end trading deadline approaches (markets are closed on Monday the 31st).  In any event, we were looking for a resistance bounce after yields traversed most of their recent range in the past 4 days and for now, it looks like we found it.

Econ Data / Events
Market Movement Recap
08:50 AM

Weaker at first in the overnight session, but another EU bond rally led US yields back toward unchanged levels (German Bunds are 3bps lower on the day vs US 10yr yields 1bp higher at 1.57%).  MBS started the day roughly unchanged as well, but have lost 2 ticks so far (-0.06). 

12:42 PM

MBS stumbled a bit between 1030am and noon, with the the only real scapegoat being high supply at today's Fed buying operation.  We could also consider that things have been a bit bullish on the Treasury side of the bond market so far this week, but we'll see what's what after the 1pm 5yr auction.

01:40 PM

paradoxically weaker after a fairly strong 5yr Treasury auction. No obvious scapegoats other than a reshuffling of trading positions and a bit of a curve-steepening bias.  10yr up 2bps now at 1.579.  UMBS 2.5 down an eighth at 103-23 (103.72).

03:31 PM

Bonds crossed the 3pm CME close with modest weakness intact and no major drama since the modest sell-off that followed the 5yr Treasury auction.  Same trading levels as the last update.