UST MORNING CALL: Range Trade Reflects ‘Squishy Fundamentals’
(Bloomberg) -- “Range trade in Treasuries was challenged this week but continues forward with much the same squishy fundamentals that created the sideways muddle to begin with,” FTN strategist Jim Vogel says in note.
- Overnight gains included “a flattener on the completion of a concentrated sovereign supply calendar”
- Other observations from strategist morning notes:
- BMO (Aaron Kohli): “With the auctions out of the way and any pretense of a concession behind us, the energy markets are looking forward to the Doha talks, which may be part of the rationale for the crude run-up for the last few weeks as well as the 2.5% drop overnight”
- CRT (David Ader): “Weakening volume (or strengthening) into a trend tells that fewer (or more) people are trapped and forced to chase the price action and thus exacerbate it,” and “this sort of momentum runs its course and/or has limits” which “is where we think we are now”
- Marty Mitchell (independent): “Price action through the auction process was quite good and the concession building process was shallow and relatively limited,” so “key takeaway is that the demand for longer duration remains strong, even at current levels of nominal rates that have real rates negative after adjusting for inflation”
- Seaport Global (Tom di Galoma): “Aggressive bid in the long-end is a reflection of weaker economic data and the Fed’s willingness to remain on hold longer than well anticipated market sentiment”
Alert:
HALISTER1Source: BFW (Bloomberg First Word)
People Aaron Kohli (Bank of Montreal)
David Ader (CRT Capital Group LLC)
Jim Vogel (Ftn Financial)
Marty Mitchell (The Mitchell Market Report LLC)
Tom Di Galoma (Seaport Group LLC/The)
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