We’ve been watching the intraday trading ranges in bond markets to keep an eye on just how flat things have been in the wake of last Wednesday’s big trading day (due to econ data and the Fed). “Inside day” is a term that comes up when things are this flat. It refers to a day’s trading range falling “inside” the previous day’s range.
This week has been notable in that Tuesday and Friday were both inside days. That’s particularly striking today as it required a narrow trading range of a mere 2.44bps (2.142 – 2.166).
Adding to the intrigue is the fact that there were a few tradeable headlines–especially from Fed speakers who seemed to be singing more dovish tunes on the prospect for inflation to frustrate the policy path. Then again, the grudgingly slow admission of economic reality among Fed members is one of the reasons rates are “hanging out” in this low range in the first place.
Markets want to see if a more robust slate of economic data casts a more decisive vote to break this floor or bounce. Next week’s line-up might be enough, especially given the just-announced Yellen speech on the 27th.