The various sectors of the bond market have been rather quiet today. There had been a substantial flattening in overnight trading as the 10 year bund broke down in response to the report of robust inflation in the Eurozone. One source reports that the report also triggered some selling of Europe in favor of the US. The only other flow I have heard about in Treasury land have been of the cosmetic variety with some accounts rolling forward and others doing various small extensions to meet duration requirements of the indices. None of these trades has been noteworthy or market moving.There has been some receiving in the belly of the swap curve and swap spreads in 5 year and 10 year are each about 1 to 1 ½ basis points tighter.
Money managers have also been buying MBS and collateral is about 1 ½ basis points better than swaps. The gentleman who informed me of that did hold a degree of skepticism regarding the buyers. He felt that the purchasers were not “choice” but were index related.