Bond Markets Near Yesterday's Weakest Levels
Treasuries began their overnight session moving slightly higher in yield. The weakness was only classifiable as "incidental" until 430am when UK employment data came in significantly stronger than expected. Core European bond markets sold off modestly on the news and Treasuries followed.
It continues to be the case that bond markets aren't covering much ground in either direction. This bout of selling only resulted in a move back to 2.86 for 10yr yields--slightly lower than yesterday's early morning weakness. It also acts to preserve January's post-NFP trading range for both MBS and Treasuries.
The lower bound of that range in Treasuries is 2.82. This corresponds to the upper bound in MBS at 104-04 (though that line has been blurrier). Fannie 4.0s are currently down 4 ticks (.125) at 103-30. There is no scheduled data until tomorrow.