MBS RECAP: Bonds Keep losing Ground. Defensive Positioning or Something Worse?

Rates were flat to start the overnight session and didn't bat an eyelash at initial strength in equities markets during Asia-only trading hours. Things changes when European trading got underway with the sizable jump in the DAX (German stocks) coinciding with the first selling streak of the day in US Treasuries. Even then, yields never went any higher than yesterday's highs before correcting a bit. We actually touched unchanged levels at 5:53am, but it was all uphill from there . Without any clear correlation to an event, headline, or related market, bond selling picked up aggressively just after 8am (when a majority of domestic traders begin their trading day). The 10 minutes of volume following the 8:20am CME open dwarfed any other 10 minute block of the day, suggesting that traders...(read more)

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