- 10yr yields now down 6.7 bps on the day and Fannie 3.0s up 10 ticks
- Several factors in play including oil, stocks, Europe, and corporate issuance
Bond markets are having a rather awesome day and yet again, we don't have much by way of gigantic, obvious motivations. So let's start going down the list and see what we find.
Oil. Yes, oil has been doing quite well of late and just today began to slip lower after apparently running into a bit of a ceiling yesterday. If oil is central to the inflationary theme that's been problematic for rates, it's no surprise to see "resistance" to further progress in oil come to the aid of bond markets. All that having been said, this move in oil isn't enough to cause what we're seeing.
Stocks. The theme here is very much in line with oil (and stock prices themselves have been tracking quite well with oil prices). With
Europe. There's also no question that European markets are exerting an influence here on this holiday-shortened, lighter volume week. Earlier today when Treasuries weren't following stocks and oil, it was because Europe was pulling in the other direction. Once Europe began its nosedive at 11:15am, bonds followed suit.
Corporate issuance. This is a bigger deal than you might expect. Yesterday saw a lot of new deals come to market and it looks like several
Whatever the true combination of motivators here, bond markets are set to close below the important 1.92%
If we want to be less dramatic about all of this, we could overlook the past 3 days of somewhat elevated intraday volatility on a holiday week and consider we're closing at the same levels as last Friday.