MBS RECAP: Bonds Barely Hang On to 'Unchanged'

Bond markets may not have embarked on a thunderous stampede back into positive territory today, but at least they put a green mark on the daily chart--their first since October 30th. 

This wasn't a given at the beginning of the day.  Fund managers and other "real money" accounts came out of the gate selling bonds at the 8:20am CME open.  This is a reversal from last week's dynamic where leveraged traders pushed bonds into weaker territory before 8:20am with real money accounts pushing back. 

The selling pressure was as limited as the corporate bond issuance schedule.  While today's one big deal DID do some damage, ultimately, there was only ONE big deal--a marked departure from yesterday's 14 separate deals.  In addition to the lighter supply, the morning ground-holding was a positive takeaway from a technical perspective simply because bonds are in oversold territory (i.e. oversold + bond rally = buy more bonds). 

As such, investors chased yields lower heading into and out of the 10yr Treasury auction.  But the chase was limited to the post-NFP range, which bottoms out around yields of 2.31.  In other words, it was a fun little bounce, but nothing very meaningful yet.  Too, we must consider that traders were simply circling the metaphorical wagons ahead of tomorrow's bond market closure (Veterans Day).