Activity Index increases to 25.15%, highest since Thu Sep 28, 2023. Months of Inventory drops to 3.41, lowest since Fri May 05, 2023! Bond Market starts the year weaker than expected. 10-Year Treasury is trading at 3.944 (+0.078).

In the overnight trading session, bonds experienced a notable decline due to a mix of reasons that are not entirely clear. This decline may be influenced by weaker European Union (EU) bonds, which happened after the release of EU economic data that matched expectations.

Another factor could be the change in the trading environment, as the benefits of the short squeeze at the end of 2023 have faded. Additionally, trading levels are returning to their previous active and high-volume state, which was last seen before the quiet period in late December. There's also a sense of caution among traders because of significant upcoming economic data, following two months of strong optimism in the market. As a result, the yield on 10-year bonds has increased by 8 basis points to 3.948%, and Mortgage-Backed Securities (MBS) have fallen by 11 ticks, which is nearly 3/8ths. This morning, there are no major domestic economic reports expected.