Before the Italy drama picked up at the end of May, bonds were very much on the bad side of the fence. Italy quickly punted rates to the other side of the proverbial fence, but the good times didn’t last long. As we moved toward last week’s central bank announcements, rates/bonds did what they had to in order to keep in line with the 21-day moving average (the center of the popular Bollinger Band technical study–middle line below).
Central bankers were generally bond-friendly (or at least not ‘unfriendly’). Combined with Monday’s trade war headlines, this helped bonds begin to creep back down toward the friendly side of the fence. But even as early as yesterday morning, it looked like the trade war motivation had given all it could give and that we might be headed back toward the center/top of the fence.
Today’s selling confirmed those fears. In part, it could be viewed as a simple return toward indecisive levels, but there was some additional pressure from an uptick in corporate bond issuance.