Bond Markets Turn Quickly Positive as Domestic Trading Picks up

Electronic volume had already been picking up before the 8:20am CBOT open (Treasuries Futures) , but we've seen a mini (VERY mini) snowball since then, taking MBS and Treasuries into positive territory. Zooming out by more than a few days shows this move as a modest continuation of the almost flat Treasury rally that began on August 6th. Participation is light enough that it only took a modest amount of buying to get the snowball rolling.

Before that Treasuries began the overnight session flat during Asian hours and came under a small amount of pressure during European hours as yields rose from 2.58 to 2.60 in 10yr Treasuries. The bounce back in the domestic session finds them at 2.561 currently with the snowball looking to have lost some steam after hitting 2.555.

MBS opened flat to Friday's levels in Fannie 3.5s, which are currently up 6 ticks at 101-04. Fannie 4.0s were 1-2 ticks weaker in their first few trades, but are now 2 ticks up on the day at 104-02. They briefly hit 104-07 during the mini-snowball and have yet to come into any steady liquidity thus far.

There are no significant market movers on tap for today, though the Federal Budget (monthly update) is released at 2pm.