Bond Markets Improve All Night, Holding Gains This AM
Although Treasuries moved slightly higher in yield during the first few hours of the overnight session, the rest saw better buying. This was especially true during European hours, but more importantly, we're hearing that it's been true in general since Friday's NFP. That bodes well for the current grind over 2.00% to be something other than a consolidation before another move higher, IF we can avoid any major shocks between now and the next big-ticket market mover.
As for what that mover might be, it's still up for grabs at the moment, but the list includes the Italian political landscape, FOMC next week, tradeflow/technical snowballs, or even a freakishly huge deviation from expectations in tomorrow's Retail Sales. The one mover to rule them all would be a big miss or big beat in the next payrolls report, but given our current distance from that, we're guessing 2.0 or 2.10 will have given out well in advance.
So far this morning, we're a lot closer to testing 2.0% with 10's currently down 3 bps at 2.096 at the moment and Fannie 3.0s up 6 ticks at 102-09. Equities futures are right in line with 4pm levels and strength/stability there doesn't seem to be much of a concern for bond markets, both in general and especially post-NFP. There's no significant economic data on tap this morning and the 3yr Auction at 1pm is perennially likely to be a non-event.