Today could be the day. If markets were to close right now, it would be the first day in 2021 where bonds could say they’d rallied 4 days in a row or 4 days in a week. Strikingly, it would also be the first Thursday in 2021 where yields moved lower. While we continue to expect the 7yr Treasury auction to have more market movement potential than normal, there could be other factors in play that help drive momentum.
Of particular interest during the last 5 trading days of March are the various month/quarter-end portfolio rebalancing needs of the mega funds out there. There have been several news stories recently touting 10s of billions of dollars of buying needs among asset managers. Clearly, if it’s obvious enough for such articles to be written, the more tactical portion of the trading community is already on top of it.
That makes it hard to know exactly how much “love” is left for rates, but anything more than “none” would go a long way in helping solidify the recent ceiling at 1.75%, and perhaps even catalyzing some momentum back in the other direction. Early April will be an important time frame as well, in the event we hear about a big shift in Treasury trading preferences as Japan begins a new fiscal year.