30yr Auction Draws a Line Under The Range
30yr Auction Draws a Line Under The Range The day began with nominal, inconsequential weakness in bonds. 10yr yields were barely up to yesterday morning’s levels and MBS were doing even better. Neither saw any drama in the first half the day, but both tanked hard after an incredibly weak 30yr bond auction. Powell offered some hawkish reminders an hour later, but if that had any impact on longer-term bonds, it was only to keep yields in the post-auction range (short-term bonds definitely didn’t like it). The auction and the resulting sell-off were significant enough to draw a fairly clear line under the recent trading range in Treasury yields for now. Mark it around 4.50% in 10s. Barring surprises, this likely means the range is the range until next Tuesday’s CPI. The lower boundary is clear. The upper boundary has a few candidates to consider over the next 2 trading days. Econ Data / Events Jobless Claims 217k vs 218k f’cast, 220k prev Continued Claims 1834k vs 1820k f’cast, 1812k prev Market Movement Recap 09:52 AM Modestly weaker overnight, but holding ground. 10yr up 6.3bps at 4.555. MBS down a quarter point. 12:44 PM Weakest levels of the day for Treasuries. 10s up 8.3 bps at 4.575. MBS holding more sideways with 6.0 coupons down just over a quarter point. 01:25 PM Much weaker after the auction. 10yr up 11.6bps at 4.608. MBS down just under half a point. 02:21 PM Modest rebound, but now weaker again after Powell comments. 10yr up 14 bps at 4.634. MBS down just over half a point. 04:29 PM Fairly flat in the final hours. 10s roughly unchanged from last update. MBS just a bit weaker (down 19 ticks or .59).