10yr yields are heading out the door at 2.335–a very significant level considering it had been the lowest closing yield of the year until October 8th. It’s also right in line with a super-long-term inflection point for bond markets with roots as far back as 2010. Holding underneath it is a good thing, and provides a silver lining to today’s otherwise slightly downbeat session.
Today’s drama started overnight when the Bank of Japan upped their annual QE allotment to 80 Trillion yen (from 50 previously). More complete coverage of the effects can be found HERE.
Very little changed from the time of that mid-day update. Trading levels weakened a bit, but never seriously violated the supportive zone in the mid 2.35’s in 10yr yields. The worst of the weakness was over by 11:30am and bonds rallied all the way back to the day’s best levels by 2:30pm. From there, month-end volatility made a small mess of the afternoon, but it never came close to challenging the day’s existing range. MBS are heading out less than an eighth of a point weaker on the day, and this feels almost impressive given what happened in broader global markets.