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Bond Markets Sideways at Weaker Levels Ahead of ISM
Posted to: Micro News
Friday, November 01, 2013 9:26 AM
The overnight session began with Treasuries trading flat near yesterday's high yields. Asian hours were a non-event. We've seen some mention of higher PMI in China, but it was close to consensus and from the standpoint of US bond markets, simply not a market mover.
Block trades during European hours have been, however, with the most notable instance at 6:30am resulting in a move from 2.57 to 2.59 by 8:19 am. That coincided with MBS opening 6 ticks lower at 102-10.
Both MBS and Treasuries have been sideways since the open, with the only significant data of the morning arriving at 10am in the form of ISM Manufacturing. 2.59 in 10yr yields was the lower boundary of the sideways range that persisted during the shutdown, so holding lower than that is good for now. It has the chance to act as technical support if ISM data doesn't object.
Given yesterday's highly charged Chicago PMI numbers, there's likely some latent concern that today's ISM could beat consensus. If it doesn't, expect a more sincere move away from this morning's 2.59 yield highs.
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