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Bond Markets Pull Back as Stocks Rally Sharply at the Open
Posted to: Micro News
Wednesday, August 06, 2014 9:54 AM
In addition to the European bond market strength overnight, S&P futures and other equities markets followed the move lower in bond yields overnight. To a much greater degree than Treasuries, equities markets get a big injection of liquidity when cash trading opens at 9:30am. Today's open has seen a sharp move higher with S&Ps already 8 points up from 9:30am levels.
Treasuries and MBS have lost ground as a result. Fannie 3.5s are down 3 ticks from 9:30 and 10yr yields are up about a bp. This isn't quite enough weakness to warrant negative reprice risk yet. Even then, it looks like we have a chance to bounce here. Too soon to tell, but so far, so good. We'll let you know if that changes.
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