While Wednesday's FOMC Minutes delivered all the short term volatility we might have expected, it was all meted to equities markets. Bond markets, by comparison, saw only token movements not even making it to the weakest levels of the morning before closing uninterestingly in the middle of the previous day's range. The fact that all of the above occurred in heavy volume means that bond markets are even more convicted about their lack of conviction (stocks are much easier to forgive considering that Wednesday's closing lows would have been 5+ year highs a few weeks ago. This is akin to 10yr yields pulling back from 1.38 to 1.45 back in mid 2012... big whoop...)
Bottom line, stocks are still rallying and bond markets are still "sideways to slightly weaker, but lacking conviction to make a big move in either direction and potentially requiring or waiting for more sincere motivation before doing so." Seriously! We had a team of analysts and 17 monkeys with typewriters up all night working on condensing the bond market caption to something so digestible. If you're into smaller, simpler meals, here's dessert:
If this dish appeared on the menu of the bond market's imaginary restaurant of choice, Chez Fed, it would be called Bernanke's Semi-Annual Testimony Before Congress..." The descriptive text underneath it might read something like: "True connoisseurs know that no dining experience at Chez Fed is complete without the flavors offered in this complex final course."
As for the price... perhaps "our sanity" would be most appropriate as we grasp at straws for a market mover that may not come in the form of a scheduled event. With the FOMC Minutes in the rearview, and knowing as we do, that the two key considerations for bond markets in the current era are the FOMC and the EU, it's almost reasonable (almost...) to hope that markets now turn to the man himself to triangulate a more exact Fed position using the other two points offered by the past two FOMC Minutes. If this ISN'T the case, the triangulation may be waiting as long as the March 20th FOMC Announcement, if another major headline doesn't steal the show before then (something European perhaps, or even something else on the Fed's radar, like NFP).
All this whimsical diatribe isn't to suggest that the market is reduced to waiting patiently and calmly for such specific, singular sources of inspiration. Indeed, there's nothing to say that the PMI data out overnight in Europe or this morning in the US won't nudge the range in one direction or another. But it certainly seems that big moves outside the 1.95-2.05 range in 10yr yields have, thus far, been well-resisted. If we're not meant to simply leak slowly higher or lower from there, yesterday's FOMC Minutes were a swing and a miss toward proving that out and now we're merely pointing out the next heavy hitter on the horizon.
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Week Of Mon, Feb 19 2013 - Fri, Feb 22 2013
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