Bond markets were weaker in the overnight session and continue trading in weaker territory so far today.  While this may not be the best way to start the week, it's a logical one given the supply and technical considerations discussed in the Week Ahead.

The most salient feature of this morning's bond market movements is the fact that Treasuries have finally ignored the cues from global equities markets.  That's not quite black and white though.  Treasury yields are indeed higher despite Chinese and US equities being lower on the day, but that has to do with Treasuries simply not following the initial overnight weakness in stocks.  Since then, the two sides of the market have been about as connected as they recently have been.

As expected, corporate debt issuance is quickly adding supply pressure for bond markets.  More simply put, Treasury is auctioning a bunch of debt this week.  Corporations are auctioning a bunch of debt.  Like any overstocked market, excess supply puts pressure on prices, all things being equal.

MBS are outperforming the Treasury sell-off.  This is typical behavior, especially in light of the supply considerations doing more to hurt Treasuries specifically.  Fannie 3.0s are down only 7 ticks in price while 10yr yields are down 16 ticks in price (up 5.4bps in terms of yield).