Today’s session ended up being much like last Thursday’s in that a narrow trading range persisted all day and never made a convincing attempt to move higher or lower. Unlike last Thursday, however, today’s levels were the best of the past two weeks.
There’s no compelling reason for this to be the case–at least not one singular reason. There could be a team effort among factors like European bond market strength and quarter-end trading goals. Or the recent strength could be as simple as a reaction to the fast pace of the recent weakness. In other words, it could just be a correction (as opposed to a reversal). We haven’t really seen enough evidence in either direction to conclude one way or the other.
One thing we haven’t had to wonder about is whether or not markets are intensely interested in domestic economic data. They’re not. It continues to come and go with little discernible connection to trading levels. This morning’s Existing Home Sales data isn’t the best example, because it was fairly close to consensus, but even so, there was no reaction. Case in point, bond markets were flat from 10am to 10:10am and only after that did they begin to improve into the noon hour.