It was a tremendously calm day for bond markets. In fact, 10yr yields held a range of 1.73 to 1.768--the narrowest of the entire year. Still, the modest amount of movement managed to be positive, even though that didn't look like a guarantee early in the session.
Coming off the overnight hours, bond markets were weakening in concert with rising equities and oil prices. The morning's economic data actually had an impact though. Chicago PMI was much weaker than expected (47.6 vs 53.0) and helped bonds bounce out of the negative territory they'd been slipping into. A weaker reading on Pending Home Sales only reinforced the move.
European equities markets surged (higher) into the close and made an anemic attempt to pull bond yields higher, but we bounced just before touching negative territory. The rest, as they say, is history. Both MBS and Treasuries tread quickly sideways to slightly stronger into the close. A 2pm swoon in equities provided the only other detectable motivation for the day, but we should also consider the 3pm CME pit close as a focal point of month-end trading activity. If anything, this added to the equities-inspired rally.
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