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Exciting Times and a Range-Bound Rally

Exciting Times and a Range-Bound Rally Next week is one of the most exciting and potentially significant weeks we’ve seen in a while.  It has a unique confluence of data, events and background.  This includes all the normal top tier data associated with the first week of the month, a Fed announcement, a quarterly Treasury refunding announcement, the likely resolution of a consolidation pattern at the highest yields in more than a decade, and it’s all occurring at a time when officials (and friends) are talking about the disconnect between recent economic data and the increasing chorus of contrary anecdotes.  Perhaps that helps explain the current week so far which has seen big swings in both directions.  Today’s installment included a paradoxical reaction to stronger GDP data and then a logical reaction to a strong Treasury auction. Econ Data / Events Jobless Claims 210k vs 208k f’cast GDP  4.9 vs 4.3 f’cast, 2.1 prev Durable Goods 4.7 vs 1.7 f’cast, -0.1 prev GDP Deflator 3.5 vs 2.5 f’cast, 1.7 prev GDP Final Sales 3.5 vs 4.5 f’cast, 2.1 prev Market Movement Recap 08:51 AM Slightly weaker overnight, but bouncing back with Europe and GDP final sales swing/miss.  10yr down 5.7bps at 4.904.  MBS up 9 ticks (.28). 12:07 PM Gains continue.  MBS up almost 5/8ths.  10yr down 7.4bps at 4.887 01:39 PM Strong 7yr auction. 10s have added several more bps to the day’s gains and are currently down 11.6bps at 4.845. MBS are up 3/4ths of a point. 04:27 PM Flat near best levels since the auction.  10yr down 11.9 bps at 4.842.  MBS up just over 3/4ths of a point. 

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