MBS Day Ahead: Trading Patterns a Bigger Story Than The Data

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Posted To: MBS Commentary

In the day just past, bonds started out in stronger territory only to lose ground by the closing bell. This wasn't necessarily destined to be the case, but a rather weak 7yr Treasury auction suggested that the recently bottomless demand for Treasuries may indeed have a limit. The next biggest move of the day happened at the 3pm CME close. This is notable because it suggests trading itself is a bigger motivation than economic fundamentals--at least this week. In the day ahead, we can expect the same patterns to continue, with the economic data of little importance next to any potential tradeflow -driven or technical moves. Case in point, the 8:30am econ data has had no impact. We're more likely to see a reaction to the times on the clock that affect liquidity (like 9:30am, noon, or 3pm...(read more)

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