Bond Markets Holding Modest Overnight Gains; Stock Lever in Play
Equities and Treasury yields moved lower in tandem overnight, with the latter seeing more volatility within its narrow range. 10yr yields moved down to 2.488 just after midnight and bounced back to 2.508 at the start of the European session.
Those high yields from the overnight session have ended up being a supportive ceiling that has now lasted through the early domestic trading. Volume has been "OK," but not epic. Treasuries moved off their best levels into domestic hours, but still hit 8am in positive territory. MBS consequently opened up a few ticks higher than yesterday and have extended the gains while Treasuries held the aforementioned overnight ceiling.
930-1030am has seen more connectivity between stocks and bonds, where weakness in equities is currently helping bond markets maintain some positivity. Fannie 3.5s are currently up 6 ticks at 102-24 while 10yr yields are down just under 2bps at 2.4944.
None of the morning's data has had an impact, which was to be expected. Instead, today is a day for watching technical levels to assess the underlying mood and conviction of yesterday's rally. The pivot-point ceiling bounce overnight (10's treating yesterday's floor as today's ceiling) is promising so far. Technical significance increases greatly as we approach 2.47, if we approach 2.47.