Bond market volume was a little better than half of its recent average today--something that's not shocking to see on the return from a 3 day weekend without any big ticket economic data. Overseas markets contributed to a weaker bias out of the gate, and while that stabilized in early U.S. trading, selling was slow, steady, and linear from 11am through the close. With that, yields find themselves back in the range that has contained a majority of the trading of the past 3 weeks (4.50 to 4.57).
Moderately weaker overnight with MBS down 6 ticks (.19) and 10yr up 4.4bps at 4.52
01:08 PM
10yr up 6 bps at 4.536. MBS down 6 ticks (.16)
03:02 PM
10yr yields are up 6.7 bps at 4.543 and MBS down roughly 1/8th from highs (quarter point on the day).
Lock / Float Considerations
We entertained the possibility that last week's strong close could have been driven, in part, by short covering heading into a 3 day weekend. That's all the more possible in light of the seemingly serendipitous losses at the start of the new week. Bonds are back in the stance of waiting for big ticket economic data which is in relatively short supply this week. Risk reward remains fairly neutral amid the lack of data
