The empty data calendar combined with "already been heard" Fed speak plus a little "nothing new" from President Obama created a VERY SLOW trading environment today.
The S&P set yet another 2009 high price mark though....unfortunately, this time TSYs were unable to hide from this seemingly never ending run up in equities. The benchmark 10yr TSY yield has risen 6 basis points to 3.42, extending Friday's selloff and pulling back a bigger portion of last week's gains...and in the process reminding us all of the range/day trading environment.
Plain and Simple: ITS STILL A TRADER'S WORLD!!!
Consequently the FN 4.5, which played follow the leader today, has fallen to its lowest price of the day....making reprices for worse are more likely.
Volume in both the fixed income and stock markets was brutal. 109,000 2s were traded, 283,000 five year contracts, 522K 10s, and 116,000 30s. In stocks, the S&P just barely approached the 10 day average of volume...for a post Labor Day trading session, this is LOW volume.
The slow news day forced the media to create conversation of its own...specifically an over-sensationalized story regarding a deteriorating US/China trade relationship....which we obviously feel was way overblown. BUT, in the spirit of joining the fun, I suppose we should attempt to correlate the news to bond market trading flows...(ugh)
The best explanation I can offer up is that once trader's realized it was nonsense, stocks rallied and bonds sold off. Well noooo...TSY yields started moving higher on Friday afternoon, then went sideways for most of the day before reaching an intraday high this afternoon. Yeh but the dollar was rallying higher this morning...nope, it lost all progress early in the session.
Nevermind I got nothing...from our conversations with traders, this was largely OVERLOOKED. When the news is slow, the media must find a way to create clicks...dont get sucked into over-dramatized "click creating" content.
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