[MBS Commentary] – MBS MID-DAY: Lack Of Italian Headlines Leaves Bond Markets Flat

MBS MID-DAY: Lack Of Italian Headlines Leaves Bond Markets Flat

Posted to: MBS Commentary
Thursday, March 28, 2013 11:09 AM

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Although bond markets have been far from completely flat–in fact there was a solid 4bp swing in 10yr Treasuries overnight–both MBS and Treasuries are settling into relatively flat trading patterns as some of the morning volatility dies down.  “Risk-on” undertones via uneventful Cypriot bank reopenings and quasi hopeful Italian snippets pushed Treasuries higher during European hours, and right up to the mornings US economic data.  Not only was there a good show of technical support at 1.87% (same as yesterday morning), but the data has all been lackluster, with Chicago PMI experiencing the bigger miss.  The interesting thing about this morning’s bond market resilience is that it’s not actually in line with recent examples of “movement vs data/events.”  In other words, bond markets should be just a bit weaker than they are if recent history and other trading levels (European metrics, stocks, etc.) are a guide, but the presence of month/quarter-end index buying is providing a small, relative boost, helping to keep us nearly unchanged .  The 7yr auction is coming right up at 11:30am.

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