MBS RECAP: Bonds Hold Ground Despite Stock/Oil Gains

• Data overlooked as bonds react to stocks/oil early 
• Bonds then ignore stock/oil rally later in the day and hold ground at stronger levels
• Could be month-end bond buying or bonds could be calling stocks' bluff.

Bond markets had quite the resilient little day.  Stocks and oil prices both surged well into positive territory in the early afternoon but MSB and Treasuries merely opted to level-off and hold sideways at stronger levels.  Granted, these levels are still weaker than yesterday's best levels, but they're just as far away from yesterday's weakest levels too!  So pick the fullness of your glass however you see fit. 

Data was uneventful in terms of market reaction.  The data itself was a potential threat with Durable Goods coming in much stronger than expected.  But bond markets weren't impressed, choosing instead to follow stocks and oil sideways into 9:30am and then lower from there.  That made it all the more impressive when bonds continued sideways as stocks went on to their best closing levels since January 6th.

It's hard not to view bond markets as a more cunning mastermind to the stock market's flights of fancy.  Bonds seem to be biding their time with a certain level of confidence that stocks and oil are destined to return lower. Either bonds are calling stocks' bluff, or we could be seeing some extra resilience due to month-end trading needs.