They left open the door they might be back in October. Factors in the previous paragraph will need to play out this Fall. Given the circumstances, the Treasury market is functioning well. With trading ending at 2 pm instead of 5 pm and up to 3 days to settle a trade, evidence of growing liquidity continued today with the market relatively calm and the 10 year Treasury down 2 BP from Friday. Mortgage Backed Security spreads regained their footing today and narrowed after widening quickly in the few days after the attack.
Spreads seem to be tightening due to investor fear of corporate bonds at the moment.
Volume is low in the Mortgage security market given the present low liquidity in all instruments. Given the perceived credit strength of commercial MBS, we expect spreads to slowly tighten further in coming weeks. The 10-year Treasury is down 5 BP today as the Bond Markets reopened. Though many traders are incapacitated, the Fed's massive overnight repurchase program helped create much needed liquidity. The Bond Market Association recommended trading hours end at 2 pm rather than 5 pm and three days be allowed for settlement rather than one day.