Bonds Finding Buyers Despite Stronger Data
Time for another installment of “finding a narrative to fit the price action.” In other words, bonds aren’t doing what we’d expect based on this morning’s economic data. That happens sometimes. Most recently, it tends to happen in the other direction (i.e. bonds selling despite weak data). In today’s case, one of the only ways to reconcile the friendly reversal is to say something like “it’s not uncommon to see corrective rallies when yields are so close to multi-decade highs, or on the day before a key data point like the jobs report.” Sadly, it can also mean that bond sellers are simply squaring positions (i.e. not “new” buying of bonds as much as a side effect of previous selling). Either way, the move is small enough not to obsess over, but green enough to appreciate.