Bond Markets in Stronger Territory amid Limited News/Data
There has been little to write home about during the overnight and early domestic sessions though bond markets are maintaining a positive stance so far. Treasuries began Asian hours holding steady despite big gains in Asian equities markets. 10yr yields had fallen a few bps by the start of the European session whereupon they made their best gains despite positive European economic data.
2.914-2.92 came into play as a supportive ceiling in much the same way it had been on Friday morning. It's as if this zone was the top of the real trading range and was only broken as markets went home for the weekend. With the new week picking up in activity, it looks to have been the baseline starting point for this morning's range--not an uncommon Friday to Monday dynamic.
The domestic session has been quiet so far with 10's moving down to 2.88--not quite to Friday morning's low yields. Meanwhile, MBS are trading above their best levels from Friday with 4.0s up 14 ticks on the day at 102-25, This is right in line with one of the 4 major pivot points that have defined Fannie 4.0 MBS movement since mid June (104-10, 103-16, and 102-02 being the other 3).
As such, we're more likely to see resistance to further improvements, but those doors could open if Treasuries do more to challenge their best levels from Friday. That's something they'd have to do without help from any significant calendar events as the rest of the day remains light on data.