Morning Report – More bond market volatility ahead? 3/31/15

Markets are lower on no real news. Bonds and MBS are up.

Home Prices rose .87% month-over-month and 4.56% year-over-year according to Case-Shiller. This is January data. The West and Southwest continues to outperform the Midwest and Northeast. A measure of housing market “healthiness” indicates the housing market is in the best shape since 2001.

It looks like we are close to an agreement to extend talks with Iran for 90 days and to outline the big steps needed to get a deal. The main sticking points seem to revolve around the actual mechanics of lifting the sanctions. The main thing to keep in mind is that one way or another, the sanctions will probably be lifted and a big new oil producer will begin dumping crude on world markets.

As we get closer to “liftoff,” which is Fed-speak for increasing interest rates, market professionals are worried about the possibility of more volatility in the bond markets. They point to one trading day in October, where the 10 year bond yield traded in a 40 basis point range intraday. A combination of automated trading and the unintended consequences of regulation have hampered liquidity in Treasury markets during periods of volatility.

Speaking of bond market volatility, the government will release the jobs report on Friday as scheduled, however the stock market will be closed and SIFMA is recommending a noon close in bonds. Suffice it to say that trading desks will be thinly staffed and we could see some volatility in rates. I don’t anticipate much of a reaction in the bond market unless payrolls fall off a cliff or we see a big uptick in wages.

6 Responses

  1. fuck him. the media lets democrats get away with this shit and then thinks an apologetic finger-wagging article after the fact makes everything ok.


  2. Ultimately, he agrees ideology, and attacking them on tactics during a campaign would be . . . not useful regarding advancing his ideology.


  3. That being said, Romney should have released his taxes. I want to vote for a super rich dude who is ashamed of making a lot of money?


  4. The funny thing is that Cillizza whines all the time about how House of Cards isn’t accurate because people in Washington are much more idealistic than how they are portrayed on the show.


  5. This should be good:

    “A revolt is growing as more people refuse to pay back student loans
    By Danielle Douglas-Gabriel
    March 30”

    The Democratic message has sunk in. You guys are victims and shouldn’t have to pay back anything.


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