Market Update

Today’s 5-year auction was a clunker - so looking ahead, this does not bode well for tomorrow's longer-term 7-year note auction. The Bond remains just above the 100-Day Moving Average but volatility reigns supreme. The Bond did gain 141bp in 6 trading days. MBS fell on the above technical bearish signals after the recent rally. The 3.5% coupon fell to 102.62 down 25bp. The Dow fell 71.52 points to 13,126.21. The Treasury will sell $29B 7-yr notes tomorrow. Initial Jobless Claims and GDP will be reported and Claims should be around 350K and GDP at 3.0%.