The 30yr Bond auction flopped with the yield coming in much higher than the 1pm target.  Demand was also softer with Bid-to-Cover at 2.23 vs a 2.34 recent average.  Indirect bidders took an average 51%. 

10yr yields are quickly up to 2.29 after the auction and Fannie 3.5s are down half a point on the day at 103-05.  Most lenders are now seeing enough weakness for negative reprices to be a risk.