10 Reasons For Today's Pounding In Bonds
Just as yesterday we shared the top 10 groputhink reasons for the rip in 10 years from 3.84% to 3.75%, so today we provide 10 possible justifications for the round trip back to 3.83%. Most likely, none of this is true or relevant, but we have to fill posts with content, even if it is complete bullshit.
Market News' 10 reasons for the bond roundtrip.
1) There was mortgage selling and mortgage origination selling that weighed on Treasuries;
2) Treasury 10-year futures fell below and key support level and that weighed on prices;
3) There was speculation that turned out to be unfounded that the Fed might actually sell some MBS at some point and that just added fuel to the fire as prices were headed lower;
4) Yesterday the market was talking about duration buying as yields fell but that talk evaporated as yields rose;
5) The ADP private payroll report printed at -84,000 which was slightly weaker than expected but sources said it was not bad enough to dash hopes that this Friday's job report would show a growth in payrolls after months and months of losses;
6) Heavy corporate bond issuance of $30 billion on Tuesday was being snapped up indicating investors preference for risk and higher yielding securities;
7) The credit defaults (CDS) market continues to rally and one salesman called it a "grab-a-thon." Spreads fell below 80, a new high for this series, after being at around 97 in early December;
8) New supply will hit the market next week and Treasury will announced tomorrow how many 3s, 10s and 30s it will sell;
9) There was talk of asset allocation out of Treasurys into stocks on Wednesday;
10) Finally, the non-manufacturing ISM report was not as strong as some expected but it was not weak either. It came in at 50.7 vs. 48.7 in November.