Whether or not next week’s Fed announcement proves to bring a winter storm for bond markets remains to be seen. That said, if anything is going to do the trick, that’s the best chance we have. Between now and then, bonds aren’t quite sure what to do with themselves, as evidenced by their relative absence of movement today.
It wasn’t as if bonds simply ended unchanged after being much higher and lower on the day. There just wasn’t much movement in either direction. The only temporary exception was seen in the morning hours before the domestic open in response to the European Central Bank’s announcement and subsequent Mario Draghi press conference. As soon as European markets closed for the day, bond yields quickly returned to pre-ECB levels and drifted sideways into the close.