Treasuries are quickly rallying back to something closer to ‘unchanged’ levels vs yesterday after rising several bps to just under 1.66 in 10yr yields during the European session. 10’s are now back down to 1.637 and after opening slightly weaker Fannie 3.0 MBS are 1 tick into the green at 103-10.
Volume took a step back from recent sessions overnight, despite a fairly robust offering of data and headlines as markets are ostensibly circling the wagons ahead of Bernanke’s Jackson Hole speech. The WSJ notes that Columbia economist Michael Woodford (who has spoken at Jackson Hole before), will be there again today and is likely to discuss the topic of a recent paper citing the need for more transparent policy communication and stronger commitments.
ECB’s Coere notes the need for budget integration before Euro bonds, but also said the ECB is working on a bond-buying program according to Bloomberg. Nothing new here. Reuters notes that Bundesbank chief Jens Weidmann (key opposition of looser ECB policy) is threatening to resign both literally and figuratively in similar fashion to Axel Weber and ECB’s Stark (i.e. “we’re not getting our way, so see ya!”).
Relatively tame data out of Europe overnight, including flat inflation, unchanged unemployment, and weaker German Retail Sales, left the focus on the various headlines, and the decline in volume is our first clue that markets are waiting for Bernanke at 10am.
Before that, Chicago PMI hits at 9:45am and Consumer Sentiment at 9:55. After a mostly sideways week, today is the first good opportunity for markets to take a lead-off from the safety of that base, though no guarantee we’ll actually see that happen. Heavy hitters are yet to come in the two weeks ahead.