Bond markets began the day much-improved after a strong overnight session. Economic data was pervasively weaker in Europe and expectations for Eurozone Quantitative Easing are running high. This helped German Bund yields drop below .90 briefly.
US Treasuries came along for the ride with 10yr yields down to 2.363 at their best levels this morning. MBS have kept up with the rally quite well with spreads at their tightest levels since early August. Fannie 3.5s were as high as 102-28 at this morning (+7/32nds on the day).
The positivity hit a bit of a speedbump just after 10am when unnamed sources told Bloomberg that the ECB is unlikely to announce QE at next week's meeting, but that could depend on August's inflation data. Treasuries and MBS both gave up more than half their gains on that news, but have since gotten most of them back.
Join Now or Login to Post Comments