Bond Weakness Reinforces The Consolidation Pattern

Bonds were weaker overnight and the selling trend continued fairly steadily throughout the day.  The only exception was a bigger yield spike that coincided with (but wasn't necessarily caused by) the EU close.  It is worth noting, however, that yields topped out the moment after the EU closing bell and have been sideways in a narrow range since then.  Jargon terms like "position squaring" and "illiquidity" certainly can't be ruled out here, but we can't really act upon such conclusions without seeing how bonds are trading on Monday morning.

Econ Data / Events

  • Fed MBS Buying 10am, 1130am, 1pm

  • Core Producer Prices:
    (y/y) 6.7 vs 6.6 f'cast, 6.2 prev
    (m/m) 0.6 vs 0.5 f'cast, 1.0 prev

Market Movement Recap
08:40 AM

Tentatively weaker overnight with most of the move happening at the start of the EU trading session.  Modest recovery as domestic trading began.  10yr up 2.4bps at 1.321.  MBS down nearly an eighth.

12:22 PM

After a fairly flat morning, bonds sold off fairly quickly heading into (but not necessarily because of) the EU close.  10yr yields are now up almost 5bps at 1.344 and MBS are down 6 ticks (.19). 

01:19 PM

Bouncing back a bit now after the snowball sell-off heading into the noon hour.  MBS outperforming with 2.0 coupons down just over an eighth.  10yr yields up 4.6bps at 1.343.

03:59 PM

Drift mode engaged, right at the same levels as the last update.  For all intents and purposes, the day is over.