MBS MID-DAY: Bond Markets Indecisively Holding a Narrow Range

For all intents and purposes, only 2 things have happened for bond markets this week.  Yields rose quickly on Monday and have moved sideways since then.

From there, we can add details surrounding Greek debt drama if we like, but the only thing that accomplishes is helping assign blame to things that are already happening.  Still, assigning blame is half the fun of market-watching so here goes:

Blame modest overnight gains in European bond markets on the roadblocks that are emerging in the Greek deal.  It was good for 6bp drop in German Bund yields.  US yields only saw a 2.5bp gain on the same news.  Blame that on the fact that today is a 5yr auction and traders who are compelled to bid at auction will logically be less involved in buying ahead of the auction. 

Or take a different route and blame 2.36-2.37 as being a technical barrier than 10yr yields are treating as a floor until.unless they find a compelling reason to break it.  Either way, the most important point here is that we're flat in the big picture and waiting for the next directional cue.