It Could Always be “Over”; Record High Purchase Sentiment; No, Rates Aren’t “Sharply Lower” This Week

It Could Always be “Over”; Record High Purchase Sentiment; No, Rates Aren’t “Sharply Lower” This Week

In the day just passed, bonds endured whipsaw volatility of the highest and most frustrating order. Overnight gains were swift and largely defied any rational explanation other than the generic " tradeflows " platitude. The notion of short-covering or a short-squeeze due to an imbalance of traders betting on a bounce after Tuesday's rally is also plausible, as is the contribution from a strong move to record low yields in the EU overnight. Perhaps it was a combination deal. We'll never know. Either way, it didn't last. After European markets closed, bonds brutally erase all of the overnight gains (a fact that adds some credence to the European explanation). In the day ahead, bond traders will look around the metaphorical room at other bond traders and ask each other "is it over?" In other words