From a volume standpoint, both Friday and today were very light. This isn't a surprise at this time of year, nor is the absence of any meaningful impact on the bigger picture trend (contrast this to last Monday which was the 2nd highest volume day of the year and truly exceptional for a number of reasons). Today means the bond market is falling back into a vanilla routine that involves consolidation ahead of this week's big ticket economic reports. There could have been modest losses or gains without affecting the set-up. As it happened, we got the version with modest gains.
Sideways overnight with early modest volatility. 10yr down half a bp at 3.937. MBS up 2 ticks (.06).
12:17 PM
Still choppy, but slightly stronger. MBS up 3 ticks (.09) and 10yr down 3bp at 3.912
03:57 PM
Off the best levels, but still stronger. MBS up 2 ticks (.06). 10yr down 3.8bps at 3.904
Lock / Float Considerations
Friday increased the chances that last week's correction had leveled off. Now Monday has confirmed it. From here, we're getting into a normal data-dependent risk/reward environment with 3 solid days of data on Tuesday-Thu. Of these, Tuesday is the lesser in terms of potential impact, but if PPI is far from forecast, it could still cause plenty of movement.