T-minus 60 minutes until bidding stops out for $16 billion 30 year Treasury bonds. The rates market is weaker ahead of the release of the results. The stock lever is clearly playing a role in lower benchmark futures prices/higher yields. Check out the chart below. Stocks moved up and rates futures prices fell.
When looking at the 3.625% coupon bearing 10 year TSY note on the spot, it is yielding 3.734%. We have ventured back outside the supportive confines of the recent range.
All this movement in the wrong direction and the S&P is only just beginning to test overhead resistance. Makes you wonder what might happen if stocks start to take off again. Probably the same thing that occurred from June to December, rates settle in a range and trade the technical side of the market. So far it looks like that range is between 3.57 and 3.85.
I feel like I am repeating that last statement a lot.
Anyway. The FN 4.0 is -0-04 at 97-12 yielding 4.249% and the FN 4.5 is -0-02 at 100-16 yielding 4.376%. The secondary market current coupon is 4.438%.
The 2s/10s curve is 4 bps steeper to 285 basis points.
NEXT EVENT: 1pm release of bond auction results
Looking ahead, short positions in the bond market have been covered, leaving many market participants flat and able to "go with the flow" after the auction results. If it is not well-attended we could see some price volatility after 1pm as rates traders let the market sort through souring sentiment.
Just in case, be prepared to see lender reprice alerts as the 4.5 approaches 100-12.