After the strong move lower in rates through yesterday morning and a disconcertingly sharp pull-back yesterday, possibilities for today were diverse. It wouldn't have been a surprise to see rates correct a bit higher or to move back toward yesterday's lows, but neither of those extremes have shown up today.
Instead, we're left with what is probably the most staid scenario where trading levels are simply orbiting around yesterday's latest levels. With a low of 2.45 and a high of 2.49, the consolidation around the important 2.47 inflection point in 10yr yields borders on "scripted."
MBS have been doing a somewhat similar dance around 102-29 in Fannie 3.5s, though they 'freaked out' a bit more into this morning's weakest run. 10am provided a solid bounce, though, bringing them right back to opening levels.
While some correlation could be argued with the economic data, bond market reactions have been brief. Very likely, we're seeing the default game-plan for bond market trading today and data would only have mattered had it been wildly far from forecasts. Even then, it still might not have mattered in the current environment (case in point: crappy GDP yesterday and the day ends with bond market losses).
That's not to say data can't influence the short term ebbs and flows, simply that there are bigger considerations at the moment. Today's willingness on the part of bond markets to orbit these long-term inflection points is real-time evidence that we're hunkering down in anticipation of the biggest of those considerations, arriving late next week.
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