Whether or not Yellen actually says something that moves markets on Friday is unimportant. Maybe she will. Probably she won’t. Either way, we just need her speech to come and go so bond markets can move on with their lives.
And here’s another curveball: it’s not necessarily that Yellen’s speech is the focal point of all of the recent bond market indecision as much as it happens during a particularly indecisive time of year. If you emailed every market participant every day of the year, you’d get more “out of office” responses this week than on any other non-holiday week.
Traders who were actually in the office today did very little in terms of carrying out bigger-picture goals. Bonds were perfectly unchanged from the overnight session and experienced only slightly volatility during the day’s only active trading from 9:30am to noon. Incidentally, trading levels ended right where they began over that time. The late afternoon saw a bit of weakness in Treasuries, but none for MBS. For what it’s worth, the Treasury weakness isn’t remotely big enough to read anything into.