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Weaker After Data but Trying to Bounce Now
Posted to: Micro News
Thursday, December 12, 2013 9:16 AM
Bond markets were dead quiet overnight, both in terms of volume and volatility. 10yr yields crossed the 8am starting line right where they finished yesterday's race but then began moving slightly higher ahead of the morning's economic data.
After the stronger-than-expected Retail Sales report, both MBS and Treasuries sold-off at a medium pace. 10's crested 2.87 (vs 2.85 opening levels) and Fannie 4.0s dropped from 103-11 to 103-06. The move ignored the volatile swing in Jobless Claims.
Selling momentum stalled at 5:45am and has reversed to somewhat positive effect. Fannie 4.0s are back up to 103-10, 1 tick lower on the day. Treasuries haven't clawed back quite as much but are still better off than their post data highs--currently just over 2.86.
The morning's next data--Business Inventories at 10am--is a 3rd tier market mover at best. The focus for the rest of the day is more appropriately placed on the 30yr Bond Auction. Although details are released at 1pm, it can affect trading beforehand. In general, bond markets are more conservative ahead of a Thursday Treasury auction, provided the auction is close to expectations.
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