It's an interesting, confusing, and tumultuous moment for financial markets as traders digest an unprecedented confluence of relevant events. Two events account for a vast majority of this thesis: a potential shift in Fed policy at the next meeting and the unknowns surrounding the omicron variant. With those two gorillas in the room, we're left to wonder what sort of impact we'll see from the usual suspects such as econ data or bond issuance.
On that note, today brings elevated corporate bond issuance and several economic reports. Bonds only seem modestly interested so far. In fact, the apparent reaction to the ISM data at 10am ET was delayed enough as to call ISM into question as the motivator. The volume spike suggests it was indeed relevant, but the yield movement suggests it wasn't that big of a deal. Several corporate bonds were announced around the same time, thus complicating the assessment of "what's moving markets."
In the bigger picture, the omicron variant has ushered yields back into a range of 1.42 - 1.52%.
MBS are outperforming so far today after significant underperformance yesterday. We likely haven't seen the last of these larger-than-normal discrepancies between Treasuries and MBS.