It's not uncommon to see MBS outperform their Treasury benchmarks in the run up to a round of weekly Treasury auctions only to underperform when the auction cycle wraps up. That underperformance (or rather, Treasury outperformance) was on full display today with MBS losing about a quarter point while 5yr notes lost about half as much. While bonds are slightly closer to the weaker end of the recent range, they're still very much inside it.
Moderately weaker so far with 5.0 coupons down 6 ticks (.19) and 10yr yields up 2.6bps at 4.143
11:45 AM
flat since last update. MBS down 6 ticks (.19) and 10yr up 1.9bps at 4.136
01:04 PM
Slightly weaker bond auction = slightly weaker response. MBS down 7 ticks (.22) and 10yr up 2.9bps at 4.146
Lock / Float Considerations
Risk/reward surrounding the lock/float decision remains muted during the government shutdown. The risk tolerant crowd is still waiting to see when the jobs report comes out after the government shutdown (as long as bonds don't lose too much ground between now and then).
