Perhaps the headlines did too good of a job of selling Friday’s Greek news as something more definitive than it was. After all, most headlines were some iteration of “Greece reaches agreement to extend bailout.” In actuality, Greece reached an agreement to work on a list of reforms over the weekend that could then be submitted to the Eurogroup on Monday for a preliminary approval over the phone before being voted on in each of the 19 Eurozone countries’ respective governments before Greece’s bailout terms would be temporarily extended.
As markets realized just how true that was during the European session, bonds began to get back some of what they lost on Friday. The move ultimately hit some trip-wires in terms of trading positions, resulting in a mini-snowball that came to a non-threatening stop before crossing the bigger-picture line in the sand at 2.04.
Apart from their innate tendency to move less than Treasuries and to protest volatility, MBS weren’t able to benefit from the same sort of tradeflow dominoes. Treasuries themselves, saw exaggerated movement due to a low volume session. In general, markets are still waiting to see what Greece, the Eurogroup, and Yellen have to say before making their next big decision. It now looks like we’ll get Yellen and Greece on the same day as the latter gave us a heads up that they’d be a day late with that list of reforms.