Trade Balance came in at -34.2 billion vs. -43.5 billion expected.
Overnight, another quiet session inAsia which saw the RBA cut rates 25 bps to 2.5%. In London, Treasuries leaked higher in yield and we are opening the U.S. session lower in price. Mortgages continue to trade well, putting in an impressive performance again yesterday in which they tightened 5-6 tics vs. duration hedges. The technicals continue to favor MBS as the Fed is taking out more bonds than originators can make at these rate levels. In terms of the market, it has been very quiet with little news and many investors on vacation (or wishing they were). This leaves the market firmly in the recent range with supply coming in over the next three days.
At 11:00 AM EST there is a USTbuyback in the 5/18-4/19 sector and at 1:00 PM EST there is a $32 billion 3-Year note auction.
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