MBS MID-DAY: Very Simple, Very Awesome Day for Bond Markets So Far

By Matthew Graham

Posted To: MBS Commentary

It’s a very simple, very awesome day so far for bond markets. The European Court of Justice news was great for peripheral nations (Italy, Spain, Portugal, Ireland, Greece), but still beneficial for core bond markets (mainly Germany). Treasuries followed Germany’s gains to some extent overnight, but received a huge boost from an exceptionally weak Retail Sales report at 8:30am. The combined move was so big that we can safely assume tradeflows and technicals have taken over. In other words, traders have contingency plans in place for various trading levels being hit. Some traders might treat a rally to a certain level as a cue to sell, while others might be forced to buy (to cover a bet on higher rates for instance). On a technical note, 1.832 emerged as the post-rally ceiling in 10’s…(read more)

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