Cautious, Contained Positivity Part 2: Now With Reprices!
There's not a lot of "updating" or commentary to be done when bond markets are behaving as expected. With that in mind, markets continue to trade as expected following this morning's initial move.
Also to be expected is a general lack of big moves the day before NFP. Essentially, our best chance for a big move would have been a crazy ECB Announcement this morning, followed by crazy strong economic data, subsequently causing snowball selling in Treasuries and major spillover into MBS.
Without that "stuff" in play, there's not much left to do apart from simply meandering noncommittally back into the previous range and waiting for NFP. If you remember the fireworks analogy from a few days back, our heads were turned to see what the kids were lighting off this morning, but it wasn't impressive enough to get us to move our chairs before the big show.
On a positive note, the mild, but consistent strength has finally delivered the reprices that became possible with this morning's initial gains. They haven't come in droves, but remain possible while current levels continue to hold.
If bond markets are going to do anything else significant, they have just under half an hour before the official pit close at the CME (when most traders record end of day Treasury marks despite another 2 hours of domestic trading). Anything in that 3-5pm window is generally less consequential as far as commenting on momentum heading into the next day.