Bond markets are slightly weaker from Friday's latest levels as the Greek bailout that has been the markets focal point for several weeks, was technically approved early this morning in Europe (yesterday evening in terms of EDT). The initial announcement hit just before 7pm last night and there was a predictable jolt of volume and move higher in yields for bond markets. Slightly surprising however, was just how limited the weakness was. We could have easily imagined that 10 yr yields, for instance, might see fit to revisit some of their recent highs, but they never broke 2.05, while yields were several bps higher on 2/9, and slightly higher still in late January.
Here's a good overview of the bailout details from Reuters:
(Reuters) - Euro zone finance ministers sealed a 130-billion-euro ($172 billion) bailout for Greece
Tuesday to avert a chaotic default in March after persuading private
bondholders to take greater losses and Athens to commit to deep cuts.
After 13 hours of talks,
ministers finalized measures to cut Greece's debt to 120.5 percent of
gross domestic product by 2020, a fraction above the target, to secure
its second rescue in less than two years and meet a bond repayment next
By agreeing that the
European Central Bank would distribute its profits from bond buying and
private bondholders would take more losses, the ministers reduced the
debt to a point that should secure funding from the International
Monetary Fund and help shore up the 17-country currency bloc.
the austerity measures wrought from Greece are widely unpopular among
the population and may hold difficulties for a country which is due to
hold an election in April. Further protests could test politicians'
commitment to cuts to wages, pensions and jobs.
(read the FULL STORY)
So far this morning, 10yr yields are remaining under the 2.05 highs from the overnight session, though still operating in slightly weaker territory. MBS are weaker as well, down several ticks from Friday's latest prices around 103-09 to 103-05 currently. There's no significant economic data to inform trading levels this morning, and that continues to be the theme throughout the week with an extremely light calendar of scheduled econ. The week does bring a fresh round of Treasury auction supply, and owing to yesterday's holiday, that begins with today's 2yr Note Auction at 1pm. While 2yr notes are not likely to inspire movement in production MBS, tomorrow's 5yr auction has a much better chance. The pervasive market mover will be watching the ongoing reaction to the details of the Greek bailout.
MBS Live Econ Calendar:
Week Of Tue, Feb 21 2012 - Fri, Feb 24 2012
Tue, Feb 21
National Activity Index
2-Yr Note Auction
Wed, Feb 22
Mortgage market index
Mortgage market: change
MBA Purchase Index
Mortgage refinance index
MBA Purchase: change
MBA 30-yr mortgage rate
Existing home sales
Exist. home sales % chg
5-Yr Note Auction
Thu, Feb 23
Initial Jobless Claims
Continued jobless claims
Monthly Home Price mm
Monthly Home Price yy
KC Fed manufacturing
7-Yr Note Auction
Fri, Feb 24
U Mich conditions
New home sales-units mm
New home sales chg mm
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