There continues to be little, if anything to report about goings-on in bond markets this morning. Earlier in the session, despite activity being every bit as light as expected, there was some concern that bond markets might follow a Black Friday equities rally, but so far, both Treasuries and MBS have done a fine job of holding their ground inside the morning's range. Fannie 3.0s are actually unchanged versus Wednesday's closing levels at the moment (104-20) and 10yr yields are still hovering between half a bp to a full bp (0.005 - 0.01) higher at 1.6865. Meanwhile S&P's are up more than 10 points, moving over the 1400 mark, where they haven't closed since 11/7.
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Bond Markets Tick Into Negative Territory After Opening Slightly Stronger
The overnight session for US bond markets began with 10yr yields at 2-week highs, just over 1.70. Equities futures were similarly elevated, with S&P's around 1393 vs 1389 at the end of the day on Wednesday. The onset of the European session saw brisk corrections for both sides of the market as 10yr yields quickly returned to mid 1.66's and S&Ps to 1388--not major swings in the big picture and in expectedly light holiday volume.
Since bottoming out at 4:34am, 10yr yields moved steadily higher into the domestic open, but by 8am New York time, were still slightly lower than Wedesday's latest levels. MBS were accordingly willing to open a tick or two in positive territory, but along with Treasuries, have given those gains back now as stocks markets are posturing for a Black Friday rally.
In other words, bond markets don't have much to go on today. If equities markets feel like they do (due to anecdotal evidence of strong Black Friday sales), then it's perfectly possible we'll see a sort of "mirror and match" routine from the stock lever, albeit with more subdued versions of the movement in bond markets.
Fannie 3.0s are currently 2 ticsk lower on the day at 104-18 while 10yr yields are up 0.0099 to 1.6899. That might not seem too awful (and it's not really), but keep in mind that bond markets sold off all week. So we're essentially moving sideways, and possibly weakening a bit, at the lowest levels of the week, with further prospects of low-volume victimization at the hands of stock market for the rest of the day.
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