Demand was very good as 50% of the issue was taken by Indirect Bidders. Bid to cover ratios came in at 3.06 to 1. Both of those measures were above average. The issue was also “bid through the screen”, meaning that some got shut out even if they had at the money bids in. That is a sign of strong demand.
Sellers are in control of the market with additional downside (higher yield/worsening Austin mortgage pricing ) a high probability.
13 billion of 30 year bonds just hit the tape. Yield 3.852% with a whopping 3.2 bps tail. Indirect Bidders and Direct Bidders took 41% of the auction, leaving the street to mop up nearly 60%. Bid to cover stunk at 2.47 to 1. Overall, this was not a dog but a pack of them. Give it a D just because we hate to fail anybody. Bonds, notes, and mortgage backs are trading fast market conditions with the 10 year off ½ point and the bond down over 1 point. MBS now off 5 to 7/32’s.
We’ll give the auction a B, not to hot, not to cold, but just right considering yesterday’s disaster and the tough hedging environment that fixed income investors are in today.
Auction Update: 7-yr note auction draws 1.890%. Sees a 3.04 bid to cover (10-auction average of 2.84) and indirect bidders taking down 50.2%. Best bid to cover since 7-yr was brought back in Q1 2009. Pretty solid auction -Treasuries and mortgages are regaining some of the ground lost during the morning trading.
Not advocating a new trend change to higher Austin mortgage rates, just a hold-steady type of market. When this kind of environment is at hand, Austin mortgage borrowers are advised to lock their Austin mortgage rates and get out of the way as the risk reward is not in your favor.
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.
Austin mortgage borrowers are advised to stay a little on the defensive side until we get further confirmation that the market is headed back to those July highs
Although volume remains light, bond bulls seem to be losing their swagger. Time to get a little more defensive on the market.
We will continue to trade the small range that has been with us for a couple weeks now, swinging from high to low, low to high depending on stocks and ‘headlines”. Nothing huge here as we see Austin mortgage rates remaining low well into the third quarter.
