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Mostly Holding Ground After Extending Overnight Weakness
Posted to: Micro News
Monday, May 12, 2014 9:12 AM
Treasuries were slightly weaker at the start of the overnight session, partly reflecting a continuation of the negative technical shift (i.e. chart patterns starting to suggest a pull back to higher rates) that began last week as well as a generally better risk tolerance.
European bond markets benefited from increasing expectations about some sort of easing (rate cut or QE or both) all but promised by Draghi on Thursday. While any easing wouldn't be announced until June's policy meeting, the expectations are boosting core European bond markets. That sort of rally doesn't translate as readily to US Treasuries, as was the case last night.
10yr yields crossed the 8am mark just over Friday's highest levels and continued to lose ground before bouncing at 2.647. MBS began the day close to Friday's latest levels but followed Treasuries' early move into weaker territory.
Fannie 3.5s are down 5/32nds at 101-22 and Fannie 4.0s are down 3 ticks to 104-26. There is no significant economic data on the schedule today, and the next market moving inspiration is anyone's guess. Treasuries and MBS are currently trying to bounce back from this morning's weakest levels, and have been holding their ground since roughly 8:40am (MBS, arguably since 8:20am), though not making much progress in the other direction.
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