With nothing on the calendar but Fed speakers and being a "quadruple witching
" day, we stood a chance to see some volatility this morning. So far, things have been fairly calm, though bond markets started the day off in slightly worse shape than yesterday. There was no major cause behind that negativity. Volumes were fairly light overnight and German bond markets added some pressure right as US traders were starting their day.
Treasuries quickly snapped back in line with yesterday's latest levels after digesting the last few comments from St. Louis Fed Pres. Bullard. Despite some spikiness in Treasuries at the open, Bullard's comments aren't necessarily the reason for the rally. It was more like the last bit of overnight selling ran its course as we crossed 8am and Bullard's comments didn't suggest any further selling, so rates moved back toward yesterday's range.
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Pricing as of 11:08 AM EST
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Bond Markets Back in Positive Territory After AM Weakness
Treasuries had, in fact, traded in positive territory for most of the overnight session though they began moving higher in yield, following German Bunds amid a lack of other guidance.
Fed's Bullard was out earlier with several headlines to which much of the movement was attributed. The problem with those headlines is that the ostensible market movers among them arrived after volume and selling had already popped. Most telling is the fact that equities volumes didn't spike at the same time--or at all really.
Still, it's possible that some of the volatility around the open was Bullard-related, but it's less consequential here an hour and half later as trading levels are right back where they were before the selling began. That brings MBS and Treasuries both a tick into positive territory.
There is no scheduled data today, though we'll hear from three more Fed speakers. Running in the background will be the quadruple witching day, which is funny market-speak for the Friday on which the 4 main categories of futures and options expire. It has no inherent implication for positivity or negativity, but can add to volatility and seemingly random tradeflows.
Live Chat Featured Comments
Merrill Ross : "Bernanke could be nominated for a 3rd term, Greenspan served 18 years before retiring. I think he doesn't relish the thought, though, from all appearances."
John Tassios : "I asked the survey question today on this subject, because there are reports that pick may happen this seekend or on monday from O"
John Tassios : "I agree with that too MG. Then would make more sense why held off on taper "
Matthew Graham : "I don't know if I think that JT, but I don't rule it out"
Oliver Orlicki : "I think big ben comes back"
Victor Burek : "has Bernanke ever said he was leaving?"
John Tassios : "MG, you thinking that Bernanke may stay on for a short time longer?"
Scott Valins : "also I have to say that I have no real feel for how the economy is actually doing, especially from a job perspective. I live in NYC, all my college friends have jobs and I'm 13 years removed from college so I have no pulse on the entry level job market. I only know what I read, not what I see."
Andy Pada : "Agreed MG, but at the very least the Fed hung their hat on the economic data peg. And at the very least, we assess whether future economic data falls short, meets or exceeds what has just recently happened."
Matthew Graham : "I think it's pretty simple. We're obviously at a point where it makes sense to start talking about the Fed backing down on purchases, and we're arguably not there yet in their opinion. Unfortunately, I think too much of that opinion may have been forced by market-based freak out."
Victor Burek : "probably so mg"
Scott Valins : "JT - traders route for both directions. They don't have a bias"
Victor Burek : "i think the revision to 105k was the final nail in taper talk"
Matthew Graham : "you stuck to your guns and were right Vic. I think bonds would have still rallied if they tapered $3bln each"
Andy Pada : "Job creation 12 month average 180+; 6 month average 150+; 3 month average 140+. That is not stable, not getting better...that is simply getting worse."
John Tassios : "Yes we do SV, but so do the bond markets, because they have to make a profit too and they depend on FED guidance to make decisions. When they geot burned like that with a lot of shorts in the wrong direction, one day FED will lose control of bond markets."
Victor Burek : "my opinion was the economy was no where near where it needed to be to taper, fed agreed"