There are several types of traders that play key roles in the bond market. Their motivations and concerns can be surprisingly diverse. For instance, one might be strictly opportunistic, utilizing leveraged money to make bets over the shortest of time horizons (many times in and out on the same trading day), while another might not even care what the market is doing and simply be buying and selling based on an index that a certain percentage of their assets are supposed to match.
No matter how different bond traders might be, they all share the need to open and close trading positions. In other words, they all have to make bets.
Because of the flow of business at the beginning/end of a month/day/quarter/year, there can be a noticeable impact from the opening of new positions for Monday/January/2016, not to mention the fact that it’s also the first day/week back to a full schedule after the holidays.
Just in case it wasn’t already clear, the economic calendar adds emphasis, with the typical ‘first week of the month’ line-up of the most important data. This kicks off with ISM Manufacturing today at 10am. Tuesday marks the only lull of the week with no significant data on tap. Things heat up quickly on Wednesday with ADP Employment and ISM Non-Manufacturing in the morning followed by Minutes from the last FOMC Meeting in the afternoon. The week ends with the big jobs report at 8:30am on Friday.