GDP came out much weaker than expected this morning and Jobless Claims were noticeably stronger than expected. Pending Home Sales were stagnant and depressing, and the 7yr Treasury auction was pretty darn good considering how aggressively bond markets rallied leading up to it.
But none of that stuff mattered...
We wouldn't even need to know any of today's goings on based on how bond markets traded. Quite simply, after yesterday's break of 2.47--a hugely important technical level--anything below 2.47 is fair play for today. So when 10yr yields hit 2.402 this morning, a 7bp sell-off was a very reasonable afternoon result, as we discussed in several alerts on the way up today. Here's an example:
"One of the downsides of moving lower in rate as quickly as we have is that there's plenty of room to move higher ahead of next week's important events, WITHOUT necessarily approaching those events from a level that's "too high." In other words, 2 days ago, it seemed perfectly reasonable to approach next week's ECB announcement and NFP release from around 2.47% in 10yr yields, and yields were as low as 2.40 this morning."
Long story short, bond markets had room to sell-off without changing anything about the big picture, and they took it. By stopping short of breaking back through 2.47, Treasury technicals make no comment on the prospects for tomorrow. They merely consolidated the preexisting rally and can approach the upcoming days from a more neutral stance. A break above 2.47 could change that. 10's ended the day at 2.4697.
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