MBS Live Recap: Bonds Hold Range With or Without Today's Events

The trading week has been relatively inconsequential so far.  That's the best explanation for today's bond market gains.  Sure, there are a few anecdotes to point to in terms of cause and effect (like a big sell-off in oil, or the afternoon's auto sales numbers), but apart from having debatable significance, these factors surely aren't worth much of our attention if they weren't able to break 10yr yields out of the ultra-narrow range set during the last 3 days of April (2.28-2.35).

Stocks are undergoing the same sort of indecision (see the chart in the Day Ahead).  Combine that with the calendar of upcoming events (which includes a ton of data, the French election run-off, and the Fed Announcement tomorrow), and a sideways grind makes sense for both sides of the market.  

Bottom line: it's not about today's events.  If it was about oil, we wouldn't have had a great example of yields moving higher on a day where oil lost even more ground than today (4/19).  If it was about the auto sales numbers, we wouldn't have seen so much movement before those numbers came out.  With the benefit of hindsight, we can see that this trading range was set at the end of April and it's set to break down tomorrow, for better or worse.