Today was the story of a bond market that is considering a potential shift in momentum in response to a confluence of events. These include last Friday’s jobs report, the raft of speeches from Fed Chair Powell in the coming days, and to a lesser extent, the raft of Treasury auctions on each of the next 3 afternoons. If those events happen to strike a depressing enough tone for rates, they could help confirm that the time has come to shift away from a series of successive visits to the lowest levels since 2016.
Today, itself, really didn’t do much to fan the flames of concern. The worst thing you could say was that it failed to serve as the scene of some heroic push back to recently strong levels. In other words, it leaves the door open for drama.
The intraday drama was minimal, but frustrating nonetheless. Bonds started out trading in slightly stronger territory despite a lack of fundamental justification. There wasn’t much by way of selling pressure at first, but the absence of new and exciting buying demand was at least as obvious. The 3pm CME close marked a changing of the guard with respect to buyer/seller balance. yields moved into negative territory fairly quickly but not by a huge amount. Still, it was enough for many lenders to pull the trigger on negative reprices.