Bonds had a respectable overnight session with steady gains seen mostly during European hours. Then in the early part of the domestic session, it was Europe moving the needle yet again. Specifically, a news story suggesting a timeline on ECB balance sheet shrinkage sapped all the overnight gains. Moments later, buyers bounced back for no apparent reason (perhaps realizing the market-moving headline was based on speculation and “unnamed sources,” but it doesn’t really matter). What matters is that nothing else really matters for today or for this week. It’s just yet another morning with back-and forth volatility, but without any meaningful attempt to break out of the 6-day range (this could always change in the afternoon, but it hasn’t changed in the AM).
In fact, yields haven’t even really tried to break below the prevailing uptrend seen in the yellow line below (incidentally, the “6-day range” mentioned above is noted as well).
Here’s how that trend has been progressing in the bigger picture (6-day trend highlighted again, but other relevant technical levels added).
Last but not least, here is a look at Fed funds futures for September, December, and June meetings. The takeaway here is that the expectations for the upcoming meeting haven’t changed much since June, despite a quick pop and drop in July. Instead, it’s the future meetings that have seen the most change. That’s especially notable in June 2023 expectations moving back above the year-end rate (i.e. green line moving above orange).