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Bonds Feeling Defensive Ahead of Auctions?

Bonds Feeling Defensive Ahead of Auctions? The title of today’s recap gets a question mark because it’s fairly impossible to conclusively tie today’s market movement to measurable motivations.  In other words, we don’t have any economic reports or stand-out news headlines that coincide with a bigger push of volume and volatility.  Instead, domestic traders simply started selling first thing in the morning and backed off quickly after the first few hours.  The rest of the day (essentially 10am through the close) was spent drifting sideways.  If we want to jump to a fairly safe conclusion, it would be hard to disprove the notion that bond traders are feeling somewhat apprehensive about this week’s Treasury auction cycle. Market Movement Recap 09:25 AM Slightly weaker overnight with small but notable uptick in selling as U.S. trading ramped up.  10yr up 5.2bps at 4.629.  MBS down a quarter point. 02:43 PM Steadily weaker all day.  MBS down almost half a point.  10yr up 8bps at 4.656 04:48 PM What looked like a very faint trend a few hours ago now looks like a flat line.  Current levels are right in line with 10am.  10yr yields up 6.8bps at 4.645.  MBS down just over 3/8ths.

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