Bond markets were in the throes of a late overnight session rally by the time the domestic session began. The rally began at 6:30am Eastern time and continued steadily, with no regard for economic data, until 9am. The day essentially ended there as trading levels never got any better, but didn’t lose enough ground to matter.
10yr yields held a range from 2.479 to 2.495 from 9am on. Fannie 3.5 MBS stayed between 102-09 and 102-13.
In many ways, today’s rally simply gets bonds back on track with the rally that’s been underway for more than a week. Today’s trading range is a logical extension of Friday’s early trading range before the news hit regarding Bill Gross’s PIMCO exit. It wouldn’t necessarily have to be any more complicated than that, but if you want it to be, there is a list of other considerations on the Mid-Day commentary.