Bonds Boosted Into Stock Market Open
To a much greater extent than Treasuries, US stocks experience a surge of liquidity as the domestic "cash" session opens at 9:30am (both trade in futures markets earlier in the day). Bigger moves in stocks around the opening bell can often correlate with bond market movement.
Such is the case this morning as bond markets improved heading into 9:30am and added to gains afterward. Stocks are seeing their first significant bounce of the morning, and it correlates well with a smaller bounce in Treasuries and MBS.
10yr yields ran down to 2.695 at 9:45am and are back up to 2.706 presently. Fannie 4.0s were as high as 104-12 and have eased just slightly to 104-10--still 3 ticks better than this morning's first update and 5 ticks better day-over-day.
Other than an asset-allocation trade (money shuffling between stocks and bonds), there have also been some tradeflow considerations (what's that?) as accounts dig in to the unofficial inception of the 2nd quarter (because market participants were waiting for cues from NFP).