Holding Yesterday's Range After Positive Overnight Session
Treasuries held yesterday's range overnight, starting out flat during Asian hours and improving during European hours. The fact that core European debt made gains despite stronger economic data is perhaps a sign that recent rate ceilings are offering technical support.
On the other side of the coin and pond, Treasuries began the US session bottoming out right in line with yesterday's low yields. This hasn't resulted in any major selling, or even in a move back up to higher overnight yields, but it suggests that consolidation and uncertainty reign supreme until more meaningful data arrive later in the week, and especially until next week's FOMC festivities.
MBS opened the day right in line with yesterday's latest POST-ROLL levels (emphasis on "post-roll" because the two day chart will look like MBS opened lower. This is simply because the left side of today's chart reflects September coupon prices and the right side--October prices).
There's no meaningful economic data on tap for today though there is actually data. Wholesale Inventories prints at 10am, and no one will likely care. Slightly more meaningful will be the 1pm 10yr Auction.
Most meaningful of all will be everything else that can't be seen, isn't scheduled on a calendar, and isn't reported in the news.--the "phantom forces" or "unseen hand" of bond market movement. This refers to considerations such as Auction concessions and trading the disruption of Verizon's massive corporate bond offering set to be priced today.
These are the sorts of things that have no inherent positive or negative bias (well, an auction concession tends to push yields higher, but who's to say the concession wasn't already being built in to prices/yields yesterday?). They also don't adhere to a calendar except inasmuch as Verizon's deal will ultimately be priced and the Treasury Auction will ultimately be done. Even then, we'll have the 30yr Auction tomorrow before the cycle is complete.
Fannie 4.0s are currently up 7 ticks at 102-13 and 10yr yields are down 2.2 bps on the day at 2.9439. Equities markets are almost dead flat since yesterday morning. What's that all about?!