A little bond market talk for you, listener...as we were discussing earlier...
BONDX Clubbing...euro 1.4712...yen 89.8190 (3.378% -1-03/32)
Treasuries got trashed on a combination of chatter on upcoming tightening, a crowd running out of flattening positions with ugly positions getting squeezed and a sprinkling of inflation concern as the global economy heals.
Coming on the heels of an auction that can best be described as a "dog," there was talk the Fed was "testing" the waters on draining liquidity as a lead-up to the inevitable (hopefully) tightening.
The market tanked, reportedly dragging in some mortgage players and doing serious damage to the longer end. The 10-and-30-yrs were run back off to levels last seen following the last FOMC as players fled the spreads, pulling out of the curve flattening plays that had been generally leading trade since the FOMC.
The longer durations added 16 to 17 plus basis points on the day in a swift and brutal clubbing. Once the funds were on the wave, things accelerated to the downside. The week ahead has a comparative wealth of data due which may help as trade will surely see some correction while there are no big auctions or announcements (so, they got that going for them).
There may also be some clarification from the Fed as the FOMC minutes hit, although that might not be such a comforting thought for bond bulls under the circumstances.
The curve was flung steeper as unwinds crowded through with the 2-10-yr yield spread hitting 243.3 from 231.8. The dollar was on a tear on rate talk, taking the index back to poke through 76.50 while the yen was hit on both the buck and the euro, giving just shy of 90.00 and 131.20 plus.
The euro was able to recover some from its early slam, pulling back over 1.47.
The market will be closed Monday, and has a back loaded calendar with retail sales, CPI and the like.
Fed-speak will see NY's Dudley (13), vice Kohn (13:45) and gov Tarullo will testify late in the senate (14:30).
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