More Defensive But Not Without Hope

2 weeks ago, a heavy slate of supply contributed to small-scale panic in the bond market.  Tensions eased last week and technical ceilings were confirmed.  With another slate of Treasury supply kicking off on Tuesday, we're on the lookout for last week's linear, positive trend to face some resistance.  If we don't see any, it would speak volumes to market's comfort level in a narrow range near all-time lows.

Econ Data / Events
Market Movement Recap
08:29 AM

Initially flat overnight before following European yields higher at 3am.  Bonds calmed down a bit heading into domestic hours, but both Treasuries and MBS are slightly weaker now.  Stocks are up almost a percent to new record highs (S&P futures).  

10:23 AM

Bonds turned more decisively positive (if anything can be decisive in such a narrow overall range) after the 9:30am NYSE Open.  The timing and the correlation with slumping stocks made a clear case for a quick little rotation out of stocks and into bonds.  Both are bouncing back in the other direction now, but 10yr yields are still nearly a bp lower on the day and UMBS 2.0s are up nearly an eighth.

11:53 AM

Fed buying operation saw big supply (11:30-11:50am) and MBS are falling back to the AM lows in its wake.  2.0 UMBS now down 2 ticks (0.06) on the day and more than an eighth from the highs.  Treasury selling isn't helping.