Bond markets came into the domestic session roughly unchanged, but soon found themselves under pressure. Before 9am, concerns over the day’s corporate bond issuance along with advancing equities conspired to push Treasury yields quickly higher. That’s “quick,” mind you–not “much.”
In other words, today’s trading range was narrow for multiple sectors. 10yr yields remained between 2.028 and 2.077 with most trading happening between 2.05 and 2.03. Fannie 3.0 MBS were similarly narrow with prices ranging from 101-14 to 101-22. Even stocks had their narrowest trading range since 9/29.
Along with the lack of any significant movement, we also didn’t have much volume. Perhaps market participants are gearing up for the 3-day weekend (Columbus Day) or perhaps the relatively empty calendar of events is just doing what it does best in terms of motivating trade.
Whatever the case may be, the ground-holding in bond markets is somewhat reassuring in light of the negative technical outlook coming into the day. This is all the more reassuring considering we’re in the midst of an auction week. I’m starting to wonder if Friday afternoon and Monday’s heavy selling wasn’t simply a head-start on the pre-auction concession that we typically find somewhere in the 48 hours leading up to the 10yr auction tomorrow at 1pm.