MBS MID-DAY: Bond Markets Weaker Because... Just Because

At present, we mustn't try to force rate movement into historically reliable cause-and-effect equations.  All we know is the answer and several of the variables.  We don't know how the variables are arranged or how many more there might be. 

Bond markets moved toward higher yields overnight with the sharpest move seen on the heels of Greece-related headlines.  For context though, that was only really evident in European markets.  US Treasuries barely budged by comparison. 

From there, things made progressively less sense for those who can't seem to divorce themselves from the notion that Greece and Europe are the only inputs for US market momentum.  Treasury yields continued to rise steadily while European yields fell gradually. The economic data was a non-event (both PCE and Jobless Claims)--largely because both were very close to consensus.

If we step back from the market just a bit, we see that trading levels are still adhering to June's micro range which has seen 90%+ of trades during the domestic session occur at 10yr yield levels between 2.3 and 2.42.  With yields hitting 2.423 at their highs today, we're obviously right on the edge, but we'll have to see if the passing of the week's auction cycle at 1pm changes that.  Granted, 7yr Auctions are not that important, but the end of the week's total Treasury auction cycle can always result in a noticeable movement.