For the bond market St Paddy’s day was a 2 week celebration of “green” (as in the color of price gains or falling yields on trading terminals) beginning on March 4th. Eight of those 10 business days saw yields move lower with last Friday marking the 2nd lowest closing levels in well over a year.
It’s only natural for bonds to need a bit of a break after all that partying. They joined plenty of other revelers who may have had too much green recently in taking the day off today. Granted, there wasn’t any sort of official market closure, but it would have been hard to notice if there was! Volume was in line with the lowest levels of the year for a full business day and volatility was nowhere to be found.
The absence of volatility is a victory of sorts, considering yields are so close to long term lows and that the stock market broke above a key ceiling to make solid gains on the day.
Participation, volume, and volatility are all expected to increase into (and especially after) Wednesday’s FOMC Announcement.