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Bond Markets Significantly Weaker Following Claims/Draghi
Posted to: Micro News
Thursday, March 07, 2013 9:23 AM
After a flat, quiet overnight session, Treasuries hit 8am in New York perfectly in line with yesterday's 5pm levels. Volume and volatility had been light overnight, leaving this morning's ECB Press Conference and domestic economic data to move the needle.
The first vote for bond market weakness came from the lower-than-expected Jobless Claims, which were out at 8:30am, before any snippets of ECB Pres Draghi's press conference had begun. For their part, Draghi snippets have been net-negative for core bond markets with Euros and German Bund yields surging into the 9am hour.
The combination of weaker Bunds on a lack of bullish motivation in Draghi's press conference, and the stronger-than-expected Jobless Claims figures brought 10yr yields up to 1.976 where we've had 2 "ceiling bounces" so far. The analogous support for MBS was seen at 102-30 in Fannie 3.0s, which are now back up to 103-00 (down 6 ticks on the day). 10's are down to 1.9652 (up 2.6 bps on the day). S&P futures are roughly 2 points higher than 4pm levels just ahead of the cash open in stock markets.
Supportive levels are--well... "supportive" for now, but we can't rule out that the bounce is consolidative in preparation for the next move. Draghi's speech is ongoing at the moment and although unlikely, it could still contain a market moving surprise. There is no more significant economic data on tap for today leaving tradeflows, stock lever, and pre-NFP positioning as the main considerations.
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