Results of the 10 year auction just hit the tape, trading at a yield 3.365%. Indirect bidders took nearly 50% of the deal (very strong) while the bid to cover was 3.28 to 1 (strong). The issues was bid 5.5 bps through the screen, meaning that everyone and their mother wanted to buy it. The results have sparked a rally with the 10 year note currently up 1 point to yield 3.33%. This is the lowest yield in 2 months.
Mortgage backs have followed suit, up 10/32’s on lower rates and 5/32’s on higher rates (5.25% and up). Potential price changes for the better should be around the corner, given that current levels hold. Watch stocks. Their doom and gloom will do knowing but support mortgage pricing.