There was no early activity to speak of this morning; the stock indexes at 9:00 were unchanged from yesterday and the 10 yr note yield at 2.60% down 1 bp, 30 yr MBS prices at 9:00 +5 bps from yesterday’s 8 bp decline. No economic data early; at 10:00 a couple of second tier reports (see below). The rate markets did start slightly better but slipped again after the 10 could not hold 2.60%, at 9:15 the 10 at 2.62% and MBS prices -2 bps. Before the stock market opened this morning the bond and mortgage markets looked jittery at these critical resistance levels. At 9:30 the DJIA opened -1`3, NASDAQ -13, S&P -2; 10 yr 2.62% +1 bp and 30 yr MBS price +3 bps from yesterday’s close.
Looking over the wires this morning and not finding much new from the rest of this week. Not much in the way of economic measurements this week and very little movement in the bond market. The 10 yr note is in the tightest range we have seen in many years this week although MBS prices did improve a little. Pro-Russian rebels in the Donetsk and Luhansk regions plan to hold plebiscites on secession on May 11, after Putin discouraged them from moving ahead with the votes (wink-wink). Putin is visiting the Black Sea peninsula for the first time since he annexed it in March. Russian and Ukrainian markets are shut for a holiday commemorating the Soviet victory over the Nazis in World War II.
The separatists vote scheduled for Sunday doesn’t seem to have much organization behind it; organizers of the voting don’t have access to the official electoral register or other voting infrastructure. The Kiev government opposes the referendums on secession and says it won’t talk to those involved in separatist violence. The 28 EU nations are preparing to impose sanctions on some Russian companies, and a list may be approved by foreign ministers as soon as Monday, two officials from member countries said in Washington on condition they not be named because of the sensitivity of the issue. The companies facing penalties are blamed for the expropriation of businesses in Crimea.
Two reports at 10:00; March wholesale inventories expected to have increased 0.5%, increased 1.1% and final sales were up 1.4%; mix it into Q1 GDP and it is a plus. The March JOLTS job openings continue to hold but are lower than Feb; openings in March 4.014 mil from 4.173 mil in Feb. The report carries little weight with traders and is also weather impacted. There was no reaction to either reports.
There just isn’t much to chew on today; with a vote in Ukraine scheduled for Sunday on secession that is likely to be dissed by most because of its haphazard planning and lack of credibility is still a focus for safety fears into treasuries. In Europe markets are moving to discount the ECBs expected QE coming in June to try and move the economy forward and away from a deflation spiral that is increasingly worrisome to the ECB. Interest rates in the region likely to move lower taking US rates along. After all the ink and chatter, the 10 yr note is stalled at 2.60%/2.58%; not strong enough to push through resistance yet not weak enough to cause rates to increase. US stock indexes lower to start the day but that market also trapped in a narrow range.
RateSnapshot courtesy of TBWSratealert.com