So far this week, stocks and bonds have generally been moving together again after a bit of disconnection last week. Equities futures fell gradually overnight after putting in highs at the start of the European session. Bond yields were slightly higher at the time, and didn't really join in the move lower until the 'pit open' at the CME (820am). By far and away, that has been the most significant event of today's session for bond markets.
When a market 'open' or 'close' is the most significant event on the radar, it suggests a barren environment of potential market movers. This could keep the correlation between stock prices and bond yields in focus for the rest of the session. Indeed, they're currently falling together in lock-step.
MBS are mostly following Treasuries, but have been outperforming somewhat. Compared to yesterday's opening highs and flat ranges after 10am, MBS have done more to get back to pre-10am levels, currently up 4 ticks at 105-05 (yesterday's highs were 105-06) in Fannie 4.0s and up 4 ticks to 102-01 in Fannie 3.5s.
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