Bonds Improve After Treasury Auction; Why MBS Are Lagging

Bonds began the day weaker, but improved steadily after the 10yr Treasury auction.  MBS underperformed--partly because the Treasury auction brings more direct benefit for Treasuries, but for a few other reasons as well.  We'll discuss those (and whether or not they're important) in today's recap video.

Econ Data / Events
Market Movement Recap
08:26 AM

Bonds are unchanged despite weakness in EU bond market.  Yields were as high as 1.631 (now 1.608).  MBS are 1 tick weaker (0.03) at 102.59 (2.5 coupons). 

11:44 AM

Slightly weaker into the 9am hour, then stronger after the 9:30am NYSE open.  Levels are back in line with the first update (i.e. close to unchanged).

01:06 PM

More gains after solid 10yr auction.  Now at best levels down almost 3bps at 1.584.  MBS are unchanged.

03:29 PM

MBS at best levels now, up 9 ticks (0.03) at 102-22 (102.69).  10yr yields are down 3.5bps at 1.577.  Gains generally continued after the 10yr auction (no new market movers)