Today’s bond market trading range was the narrowest since the US presidential election, by far. 10yr yields held inside a paltry 2.9bp range (2.374 to 2.403%)–nearly twice as calm as the next calmest day (Nov 22nd, which held a 5bp range).
With the ECB Announcement coming up on Thursday, it wouldn’t be a surprise to see bond markets circling the wagons (narrower, flatter trading) in preparation for what will almost certainly be an active trading response. But today’s steadiness managed to overcome positive economic data (Labor Costs came in at +0.7 vs +0.3 forecasts–something that would normally put some pressure on bonds).
Additionally, US bond markets outperformed European bond markets. Taken together, today’s outperformance and general willingness to hold sideways in the face of stronger data suggests US traders may have had their fill of selling, at least unless more serious justification rears its ugly head on Thursday.