MBS Live Recap: Bonds Not Panicking Despite Finding Resistance

Most of today's bond market movement followed a single trade in the morning hours.  Someone with deep pockets bought a lot of 2yr Treasury debt and sold some longer-term debt in the process.  This type of "curve trade" (so named because its intent is to take a position on the movement of the yield curve) is common.  Curve trades are happening all the time every day.  This one was just much bigger than normal. 

That doesn't mean it's necessarily significant, however, as the week after Thanksgiving (which often includes the last few trading days of November) typically sees a unique combination of certain traders getting back into the market after the holiday while other traders are getting into requisite positions for month-end.

The big morning trade acted to reinforce a floor under 10yr Treasury yields in the 3.03-3.05% zone.  Bonds didn't panic though.  By the end of the day, most of the weakness had been erased.  That's a good sign inasmuch as it suggests an open mind in the coming weeks of economic data and events.