July 31, 2021

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Mortgage News

Decent Day Despite Lukewarm Treasury Auction. Dovish Fed Helps

Fed Minutes Today at 2 p.m. EST

Follow the markets live as the Fed Minutes release today at 2 p.m. EST.

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If you followed the MBS comment, you know what This afternoon could be a big deal. Markets were prepare for it for weeks and MBS Live members have followed these movements every step of the way.

This afternoon, when markets are shaken just milliseconds after the Fed announcement, MBS Live members will know what’s going on before anyone else. The accuracy and speed of our real-time price streams and alerts is unmatched.



MBS RECAP: decent day despite lukewarm treasure auction. Dovish Fed is helping

This morning’s weaker data on durable goods had no impact on trade levels. At the time, after a decent little rally overnight, bonds were about to add returns and selling pressures continued until 9:30 a.m. After a lukewarm 5 year treasury auction drifting sideways for a few hours, it failed to scare the bond traders. Preliminary gains followed with the help of somewhat cautious Fed speakers and a slight dip in stocks. All in all another good day to set up a case for support but still not enough to rest.

Econ data / events

  • Fed MBS purchase 10 a.m., 11:30 a.m., 1 p.m.

  • Consumer Goods -1.1 vs 0.8 f’cast, 3.5 prev
    Core Cap-Ex -0.8 vs 0.5 f’cast, 0.6 prev

Market Movement Review

8:21 am

Bonds opened stronger in Asia and rallied into the European hours. 10-year returns hit 1.59% before bouncing off. The general tug-of-war was between new (global) lockdown fears and stronger economic data in Europe as well as the hesitation before the auction on government bonds. MBS start the day with 2 ticks (0.06), but that’s a solid achievement considering yesterday’s closing levels.

09:28 am

Paradoxical upward pressure on yields since 9 a.m. Hedge funds were better sellers based on the expectation that traders would relax ahead of the Treasury auction that afternoon. The dealers then sold as expected. Traders are taking small steps amid uncertainty about the realignment of managed funds at the end of the quarter. MBS and Treasuries are in negative territory on this day (10 years by 3 basis points and MBS by almost 8 basis points).

1:10 p.m.

5 year auction was acceptable but not great. Bonds have barely changed in response, with 10 year yields rising just under 2 basis points higher at 1.64% on the day. UMBS outperform with 2.5 coupons by 1 tick a day.

3:04 p.m.

The best levels of the day now with a little buying frenzy at 3pm CME graduation. 10 years are down 1 basis point on the day to 1.612% and 2.0 UMBS are up 2 ticks (0.06) and are trading just below 103.0.


About the author

Operations manager,
Mortgage News Daily / MBS Live

Matthew, a former creator, started writing for Mortgage News Daily in 2007, covering a wide range of topics. When he saw a need in the marketplace, his focus increasingly shifted to the relationship between MBS and broader financial markets for lenders. …
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