MBS Touch Lows of Day. Benchmarks Test Support. Watching for Breakout

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Posted To: MBS Commentary

Let us have no illusions about the market on this holiday-shortened week. As expected, trading conditions are becoming progressively thinner and volume progressively lower. The Fed is done buying for the week, and next week brings the task of taking down another round of 2, 5, and 7 year auctions. Given that low level of participation, it does not strain credulity to think that rates are under a bit of pressure to to back up into an ideal tactical position from which to strike at next week's auctions. Or maybe instead of saying "under a bit of pressure to back up" we should say "not getting much support from sidelined buyers". Real$ bid wanted. It's really that simple. There's not much driving the markets, and whatever movements we do see are not representative enough of broader biases for...(read more)

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