Reasons For Both Hope and Fear In Today's Trading
Bonds have been in a consistent trend leading toward higher rates in the short term and that trend falls inside a similarly consistent up-trend in the bigger picture. On a hopeful note, today's early strength suggests the bigger-picture trend could offer a supportive bounce in the first half of the week. On a cautionary note, not only did bonds fail to gain much ground today, the buying was largely fueled by short covering (i.e. traders booking profits after having previously bet on rising rates).
Fed MBS Buying 10am, 1130am, 1pm
Bonds were expected moderately weaker after an orderly sell-off overnight. Stimulus, stocks, and auction trepidation are easy to blame for the move. 10yr is up 2bps at 1.189% and 2.0 UMBS are down 2 ticks (.06) at 103.
Bonds bouncing back as EU bond market rallies into its close. 10yr yields almost 1bp lower now at 1.162%. UMBS 2.0 is unchanged on the day at 103-02 (103.06).
US bond rally continued through the AM hours and ended as soon as the EU bond market closed. Holding ground at just-barely-positive levels since then. 10yr down 0.9bps at 1.16% and 2.0 UMBS up 1 tick (0.03) at 103-02 (103.06).