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In the afternoon bonds continued to rally details about recent trade war play unfolded. Monday those details unfolded and were traded yesterday . Notably absent from the rally was that the MBS marketplace (for the most part). Expect this to continue if trading is any indication. But expect it for a sword that is glamorous. In other words, if Treasuries sell off, MBS must sell away less. There aren’t any substantial financial reports on tap but the Treasury auction cycle hits its stride. Yesterday's 3yr auction has been feeble and dealers took it to buy Treasuries. If now 's longer-term (10yr, in this case) auction is average or better, we should observe some extra buying. From the bigger-picture…(read more)
Glad ToMBS Commentary