Ceiling Defense!
There are two ways to look at today’s weakness in the bond market. On one hand, yields did a great job of holding underneath the 4.34% technical ceiling in 10yr yields despite multiple bounces. On the other hand, 10yr yields moved quickly up to the 4.34% ceiling and attacked it multiple times. The first scenario is an optimistic defense. The second scenario could be viewed as “staging” for a breakout. Traders likely haven’t determined which scenario they’ll support and are instead waiting to see the lay of the land after next week’s Fed events.
Econ Data / Events
Import Prices
0.5 vs 0.3 f’cast, 0.1 prev
NY Fed Manufacturing
1.9 vs -10 f’cast, -19 prev
Industrial Production
0.4 vs 0.1 f’cast, 0.7 prev
Consumer Sentiment
67.7 vs 69.1 f’cast
1yr inflation expectations down 0.4
5yr inflation expectations down 0.3
Market Movement Recap
09:14 AM Weaker overnight with Europe, but traders “buying the dip” in bond prices now. 10yr up 2.2bps at 4.308. MBS down roughly an eighth.
12:00 PM Slightly weaker into the PM hours. MBS down about a quarter point. 10yr up 4.4bps at 4.33%
04:24 PM 10yr up 4.2bps at 4.328. MBS down .25 to .375.
