The Day Ahead: Limited Domestic Econ Leaves Greek Swap Deadline in Focus

Bond markets open today slightly weaker after an overnight session characterized by linear, uneventful selling within a range and extremely light volume.  10yr yields have been bouncing back and forth in the same range between 1.90 and 2.07 for over a month now (with much of the previous movement contained by these levels as well). 

As we gear up for the two core events of the week--the deadline for Greece's Private Sector Bond Swap and Friday's Employment Situation Report, yield movements have become increasingly narrow.  This week's range has only been 1.93 to 2.01--extremely narrowing the big picture.

Bond markets followed European benchmarks (German Bunds) lower this morning, ostensibly on optimism over scattered reports of various private sector participants signing up for their Greek haircuts ahead of today's deadline.  Greece still doesn't have the percentage it seeks in order to secure bailout funds or to avoid being forced to activate collective action clauses, but perhaps it looks more possible than it did yesterday?

There's only one piece of domestic economic data this morning and it doesn't promise to be too much of a threat to the range.  Weekly Jobless Claims hit at 830am and are expected unchanged at 351k with continued claims down from 3.402 million to 3.400. 

Unless we have Greek headlines shaking things up before 11am, the Fed's scheduled buying in the 8-10 year sector begins at the usual 10:15am, and concludes 45 minutes later.  These scheduled buybacks have consistently driven volume and price action, though not always predictably.  Main thing is to be aware of the additional risk layer around 11am.