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.