Today could be the day. If the markets closed now, it would be the first day in 2021 that bonds could say they had risen 4 days in a row or 4 days a week. Notably, it would also be the first Thursday in 2021 that yields fell. While we continue to believe that the 7-year Treasury auction has more market move potential than normal, there could be other factors at play that are driving the momentum.
Of particular interest during the last 5 trading days of March are the various portfolio rebalancing needs of the mega funds out there. There have been several reports of late touting asset managers’ buying needs at $ 10 billion. When it is obvious enough that such articles are being written, the more tactical part of the trading community is already on top.
That makes it difficult to know exactly how much “love” is left for interest rates, but anything but “none” would go a long way in consolidating the recent 1.75% cap and maybe even some momentum into it to catalyze other direction. Early April will also be an important timeframe if we hear of a sharp shift in government bond trading preferences as Japan begins a new fiscal year.