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Bond Markets Give up Gains After Overnight Flight-to-Safety
Posted to: Micro News
Monday, September 30, 2013 9:13 AM
Asian equities markets were hit hard at the beginning of the overnight session and bond markets rallied as prospects for a government shutdown in the US grew increasingly likely. The House sent a stop-gap funding bill to the Senate, but it includes provisions to delay the affordable care act for 1 year, thus making passage unlikely.
Although Asian stocks bounced higher several hours into the session, US Treasury yields and equities futures stayed lower until the European hours. At that point, there was a moderate push higher/weaker in Treasuries, but all told, the move was from 2.595% in 10yr yields to 2.623%. Bonds bounce back lower in yield as the domestic session approached.
Italian political drama has been more of a factor this morning than the domestic variety and most recently, a bounce lower in Italian yields has resulted in German and US yields snapping back above overnight highs shortly into the US session. Germany is obviously leading the way higher (in yield) for Treasuries at the moment.
10's just hit unchanged levels at 2.6281 and Fannie 3.5 MBS are now a tick worse at 101-23. They had been 7 ticks higher than that at 101-30 at the open.
European headlines may continue to occupy the driver's seat until Chicago PMI at 9:45am. The door remains exceedingly open for domestic political headlines as well, though the Senate isn't scheduled to return to session until 2pm Eastern.
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