With an absence of significant economic events and the storm of the century bearing down on the Southeast, trading activity was understandably a bit lighter than yesterday. After a bit of morning volatility, bonds settled into a sideways pattern that left most of the week’s gains intact.
Bonds were actually stronger in the overnight session, despite European bond markets losing ground. That weakness followed headlines that suggested the ECB was a little farther along in mapping out its tapering plans than Draghi admitted yesterday. Not a huge deal, but somewhat relevant and just a little bit bearish for the bond complex.
US bond markets didn’t weaken until 8:20am (the CME open) and then again after 9:30am (the NYSE open). The fact that weakness waited for these two time frames suggest certain traders were simply planning on taking their chips off the table today. With more than a few bets made on lower yields recently, it would stand to reason that the closing of those bets would result in a slight bump for rates.
The selling was over just before 11am, with stocks, bond yields, and $/Yen (a risk indicator, in this context) all moving sideways-to-slightly lower into the close.
Article source: Mortgage News Daily