Treasury Trading Trends Coming and Going

Way back in early 2021, steepening was all the rage.  That refers to traders' preference for shorter term bonds vs longer (the result is a steeper yield curve).  Steepening stalled in Feb/March and then suffered its worst defeat in a long time after last week's Fed announcement (thanks to the dots).  The resulting "flattener" trade was big and fast enough to merit a corrective bounce today.  Simply put, longer term yields surged higher and short-term yields barely budged.  It didn't help that Fed speakers were freely talking about tapering today (tapering hits longer-term bonds hardest).

Econ Data / Events
Market Movement Recap
09:00 AM

Much stronger in Asia (big stock losses and more 'flattener' follow-through).  Much weaker in Europe as flattener trades have run their course.  Bonds don't want to be too aggressive ahead of auctions, given recent gains.  10yr up almost 3bps and MBS down almost a quarter of a point.

10:43 AM

Additional weakness heading into the 10am hour--possibly with some damage coming from 2 Fed speakers talking about tapering (not imminent, but eventual).  10yr up more than 3bps to 1.48%.  MBS down a quarter point after being down nearly 3/8ths briefly.

11:26 AM

Friendly bounce that began roughly an hour ago now bringing 10yr yields back under 1.47.  MBS are down 7 ticks (.22), but that's more than an eighth of a point better than the AM lows. 

02:37 PM

The sideways grind has commenced with higher lows and lower highs since just before the noon hour.  No major changes to trading levels.  Treasuries erring toward the higher/weaker side.