Last week, MBS underperformance was front and center.  One of the justifications was the fact that MBS almost always underperform when Treasuries go on a nice bull run and las week certainly qualified.  The next step in that line of thinking would be to assume MBS outperformance when Treasuries leveled off or corrected.  This morning fits the bill.  10yr yields are up 6bps at 4.286–a move of half a point in terms of 10yr note prices.  5yr notes are down a quarter point in price.  Meanwhile, 6.0 MBS are down only an eighth of a point and 5.5 coupons are down only 7 ticks (.22).  As for the weakness itself, underlying motivations are not jumping off the page.  Volume is very low.  As always, that can grease the skids for random volatility, and a sell-off is the less surprising option after coming off a strong week that began to run out of steam by Friday.
Source: Mortgage News Daily