Overnight trading was volatile at first, with yields falling all the way to 1.846 for 10yr Treasuries. In the first hour of domestic trading, they’ve been roughly 10bps higher! What’s up with that?
Rather than ask that question, focus on the fact that yields are only 1bp higher from Friday afternoon, and Friday afternoon marked last week’s best levels. After all, both stocks and bonds are still lower than most of last week’s range.
As for the 10bp swing, it prompted the creation of a LONG overdue addition to the MBS Live knowledge base: here you go.
This week’s calendar flashpoints include Treasury auctions (mainly the 5yr on Wednesday) and the PCE inflation data on Friday morning. Yields are smack dab in the middle of their gradual uptrend, but also in the middle of an attempt to hold the 2.06% ceiling as far as 10yr yields are concerned. We’ll be watching 2.06 and 1.91 to see which gives way first.