MBS RECAP: Heading Out at Best Levels After Shaking Off Post-Auction Weakness

By Matthew Graham

Posted To: MBS Commentary

Bond markets were at their best levels since Monday heading into today’s 1pm 30yr Bond auction (MBS prices don’t reflect that only because of the roll). In so doing, they were rushing to price in a certain amount of positivity (or rather, a fear of being too negative) expected to be validated by the auction results. They overshot the mark as the auction stats ended up being slightly weaker than average/ That was still a relatively impressive result given the that bond markets are more prone to weakening ahead of auctions. In other words, as opposed to betting that the auction would be challenging and breathing a sigh of relief after it was done, traders instead bet on the auction being strong and pulled back a bit after seeing they overshot the mark. But why take the opposite stance…(read more)

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