Traders punched the clock, made their trades, and went home today. Before the clock-punching, there was the overnight session, in which European bond markets sold off at a fairly healthy pace. German Bunds were 7bps weaker from trough to peak. During the same time, overnight Treasury trading only lifted 10yr yields 3bps.
As soon as domestic traders got in, bonds began to recover. The biggest giveaway with respect to today's illiquid, uninspired grind was the fact that the bounce back happened right after a large chunk of domestic bond market participants began their trading day (820am CME open). This was enough to get bonds back near 'unchanged' levels, though Europe continues to be a drag.
Once Europe was closed for the day, domestic bond markets improved into the afternoon. A strong 2yr auction didn't hurt the case, but I'd emphasize that it wasn't as much of a driver of trade as the chart might make it seem. Virtually all of today's gains can be accounted for by the onset of domestic tradeflows balancing out European weakness, followed by domestic tradeflows being left to their own devices after Europe closed.
MBS | FNMA 3.0 100-07 : +0-02 | FNMA 3.5 103-11 : +0-01 | FNMA 4.0 105-30 : +0-01 |
Treasuries | 2 YR 0.9260 : +0.0050 | 10 YR 2.2430 : -0.0210 | 30 YR 2.9990 : -0.0233 |
Pricing as of 11/23/15 5:35PMEST |