Bond markets lost only a modest amount of ground today, effectively moving sideways in the bigger picture. This didn't look like a given during the morning hours when 10yr yields were up by more than 4bps, but things quickly calmed down. Ultimately, both Treasury yields and MBS prices were able to hold inside Friday's range (which was already fairly narrow in the recent context).
Even though trading levels were slightly weaker, there were a few redeeming qualities. First of all, both stocks and oil prices moved higher on the day. That would normally be bad for bonds, but the gains weren't so extreme as to necessarily demand an explanation as to how bonds could defy the broader market trend.
Perhaps a bit more defiance can be inferred in how bond markets weathered the storm of corporate debt. Numerous companies issued new corporate bonds today. These investment grade securities compete with Treasuries and MBS for some investors' attention. They also can involve Treasury sales as part of the hedging process (in much the same way lenders can sell MBS to hedge new rate locks). The street did know that a probable storm of corporate supply was a risk, but not that it would hit right out of the gate on Monday morning. Relative to the amount of corporate supply and the gains in stocks and oil, holding sideways was positive for bond markets today, though not so positive as to make a comment on the bigger picture.
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