US Treasury yields surged in today’s low-volume session, driven by a strong 7-year Treasury auction that sparked a significant reaction. The auction resulted in a favorable imbalance between buyers and sellers, with light liquidity amplifying the impact.
The move lifted 10-year yields by 4.9 basis points to 4.634, marking one of the largest reactions to a 7-year Treasury auction in several years. This is not an unusual occurrence, but it underscores the significant effect of even small market movements when volume and liquidity are low.
In related news, jobless claims data showed modestly weaker numbers overnight, with the initial claim total remaining near expectations at 219,000 versus 224,000 forecasted and 220,000 previously reported. Continued claims also fell, with the latest figure coming in at 1,910,000 versus 1,880,000 forecasted and 1,864,000 previously reported.
Mortgage-backed securities (MBS) initially dropped 6 ticks but recovered somewhat to close lower by a smaller margin. However, MBS recently ticked higher as the market digested the strong auction results.
Source: https://www.mortgagenewsdaily.com/markets/mbs-recap-12262024