Posted by: cfigueira | May 26, 2010

Mortgage bonds prices

Mortgage bonds prices remain lower this morning following stronger than expected data.

Durable Goods Orders rose 2.9%, significantly stronger than the expected 1.3% increase. This is generally not bond friendly.

New home sales rose 14.8%, stronger than the expected 3.1% decrease.

The US Treasury will auction a total of $113 billion of notes this week. That is a tremendous amount of supply. Yesterday’s auction was relatively benign with the $42B 2 Year Treasury auction showing a 2.93 bid to cover and indirect bid of 36.2%. This afternoon we have a 5 year note auction.

The bond market as a whole is negative this morning as the global economic fears seem to be calmed for now. We don’t believe this is the end of volatility so stay alert.

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