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Moderate Overnight Gains Holding Steady Into Domestic Session
Posted to: Micro News
Tuesday, September 17, 2013 9:25 AM
The inevitable pall of silence leading up to FOMC Wednesday is much more evident this morning, without the distortion of unexpected headlines (Summers withdrawal). Bond markets were slightly stronger overnight, and paid little heed to normally correlated markets. Treasuries paid more attention to technical levels than to fundamental events, and they displayed a marked desire to trade increasingly narrow ranges compared to German Bunds.
As far as the boundaries of that pre-FOMC range are concerned, yesterday made things pretty easy by providing a clear set of low yields which are currently seen as "too low" (because we got there via snowball rally). High yields from late last week are similarly "too high" as they don't account for whatever small benefit it is to have Summers out of the running for Fed Chair.
After yesterday afternoon's sell-off, markets were ready to concede this a bit. Stocks and bonds both put an end to their respective sell-offs and held mostly flat overnight.
CPI data was relatively uneventful, but certainly didn't close the door to slightly improved levels. 10's are down 1.6bps at 2.846 and Fannie 4.0s are up 5 ticks at 103-01. The only remaining data for the day is NAHB's Housing Market Index at 10am.
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