CONTACT ME
MBS Recap: Corporate Bonds Interrupt Flat Afternoon

It was a pretty simple day as far as bond markets are concerned.  The collective unconscious of the bond-trading population was perfectly content to extent the weekend, unofficially.  For most of the day, it looked like a perfectly viable plan, considering a relative absence of movement in Treasuries and MBS.  But plans were foiled in the late afternoon by corporate bond issuance.

Particularly, Shire off-loaded $12.1 bln in 3, 5, 7, and 10yr notes.  For perspective, anything over $10bln would be considered a "heavy day" of CUMULATIVE corporate bond issuance (i.e. from multiple sellers).  When it's coming from just one deal, the moral of the story is that it's a very big deal.  

Only a few corporate deals per year go over $10bln, so when one of them hits on a sleepy monday, bonds feel it.  This was the exclusive and incontrovertible source of this afternoon's bond market weakness.  Even then, it left 10yr yields a mere 1.3bps higher on the day and Fannie 3.0 MBS just over an eighth of a point lower.  Both also remain well within last week's new, weaker range as they continue grinding toward this Wednesday's central bank announcements (Bank of Japan and the Fed).

This MBS Market Commentary is provided in partnership with MBS Live and provided exclusively to MBS Live Subcribers.