Strong Auction Trifecta Helps Bonds Hold The Range

The day began with a relatively bond-friendly European Central Bank announcement falling failing to help Treasuries nearly as much as it helped European bonds.  That was forgivable in light of today's Treasury auction and ongoing corporate bond supply glut.  After working through the supply and posting stellar stats at auction, bonds finally got the memo.  10yr yields rallied all the way down to the 1.287% and have been hanging out at the 1.30% technical level heading into the close.  MBS underperformed, as we would expect based on the Treasury-focused events this week, with 2.0 coupons gaining an eighth of a point as of 3pm ET.

Econ Data / Events

  • Fed MBS Buying 10am, 1130am, 1pm

  • Jobless Claims 310k vs 335k f'cast, 345k prev

Market Movement Recap
08:43 AM

Slightly stronger during Asian hours then slightly weaker during European session.  No major reaction to ECB.  10yr unchanged to slightly stronger at 1.331.  MBS unchanged.

11:31 AM

Quick but modest move to the best levels of the day with 10yr yields dropping just over 1bp to 1.321.  MBS up an eighth.  Late-day EU bond rally helping, but the TSY pop = asset allocation trading, and corp bond hedge buybacks.

01:06 PM

With the 3rd strong auction of the week, the results are in: the recent sell-off in bonds took yields to ceilings that were more than high enough for the amount of demand in the marketplace.  10yr down 4bps to 1.295.  MBS up 6 ticks or .19.

03:36 PM

10s hit 1.287 before a token bounce.  They're now drifting sideways around the 1.30% technical level.  MBS are now up only an eighth of a point on the day.