16 billion of 30 year bonds hit the tape to yield 3.954% with a bid to cover of 2.77 to 1 (average is 2.72 to 1).  The issue had a tail of 1 bp, similar to a schnauzer.  Indirect bidders took 46% (not bad) while direct bidders (Wall Street) took 18% (not too hot).  Overall, it’s a pretty good auction.  We’ll give it a B-.

Price action post auction has not done anything to help Austin mortgage pricing.  Sell side orders are still on the heavy side with MBS still off 15/32’s.  As I mentioned earlier, we don’t see this as a major trend change or a sentiment shift towards the bears.  Just a more realistic, balanced value trade in the coming days that has priced in all the bad news it can.  Careful out there.