Bond Markets Sharply Sideways Overnight, Little-Changed This AM
To say that Treasuries and MBS have been mostly sideways since Friday's NFP would be a vast and hilarious understatement. While markets may not be officially closed, these first two days of the week have been something of a gentleman's time-out. If this were a game of Cricket, the umpire has not stopped play, yet the cricketers have carried chesterfields and tea tables on to the pitch and sat down for a nice cup of Darjeeling until they can all agree that it's time to start playing again.
Certainly, Cricket is the furthest thing from their minds during that imaginary conversation just as legitimate, profit-oriented trading is far from the minds of bond traders so far this week. Just biding time until something changes.
Note yesterday's "funnel of consolidation" leading to today's "spout of ultimately sideways narrowness." Those are highly specialized technical terms, but you get the idea. Bonds are sideways. Nothing to trade.
In this environment, the motivation to end the tea party can come at any time from any event that speaks loudly enough. It could be larger tradeflows born of the necessity of corporate debt hedging or simply a disconcerting headline regarding Ukraine (though a word of caution there: the press will continue to magnify any Ukraine-related headline, whether meaningful or not. Only trading levels can tell us what markets deem important. So far, for all the "military drills" and other seemingly interesting headlines, nothing has really registered in more than a week).
There is no significant economic data on the calendar apart from Wholesale Inventories at 10am, which is arguably not that significant. 1pm brings the 3yr Note auction which might almost be a detectable market mover, but usually isn't.