Posted To: MBS Commentary
After a relatively uneventful overnight session, bond markets began the day in slightly stronger territory. The shorter end of the yield curve began the day in much stronger territory, carrying on the theme discussed in the Day Ahead charts. As the morning progressed, longer-dated bonds were clearly sold for two reasons. The first–and probably biggest–motivation was the age-old, super simple asset allocation trade. In other words, bonds were sold so stocks could be bought at the open. Secondarily, month-end tradeflows look like they’re attempting to keep the spread between certain parts of the yield curve at certain levels. For example, the spread between 10 and 3yr Treasuries topped out at 1.053% yesterday, and that level has served as a central point of gravity today. When things have…(read more)
Via:: MBS MID-DAY: Month End Sees Complex Dance Between Stocks, Bonds, and the Yield Curve
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