MBS Live Recap: Bonds Bounce Back Despite Hotter Inflation Data

3 Hours, 51 Min in the past

Bonds Bounce Back Despite Hotter Inflation Data

Feel free to name it a comeback, however do not ask why it occurred.  Today’s bond rally is a solution in the hunt for a query or an answer in the hunt for an issue.  You get the concept.  There had been solely 2 sorts of market contributors who anticipated a medium-big bond rally to observe a warmer CPI print: perma-bulls and fortunate guessers.  Any factual, goal try would depend on issues like a a re-flattening of the yield curve or a shift in provide/demand expectations as evidenced by a really respectable 10yr public sale regardless of CPI and the absence of a concessionary sell-off earlier than the public sale itself.  There can also be maybe some small case to be made that CPI “wasn’t that bad” contemplating the massive drop in month-to-month headline inflation (0.3 vs 1.2 beforehand).  

  • Fed MBS Buying 10am, 11:30am, 1pm

  • m/m headline CPI … 0.3 vs 0.2 
    m/m core CPI ………0.6 vs 0.4
    y/y core CPI ………..6.2 vs 6.0 

08:47 AM

Stronger in a single day, however promoting off sharply after the AM CPI information.  10yr up 8bps to three.068 now and MBS down half some extent.  Shorter-dated debt getting hit even more durable as a result of its nearer connection to charge hike expectations. 

10:46 AM

A decent show of ground-holding or quick masking in bonds with 10 yields now lower than 1bp increased on the day at 2.995.  MBS are underperforming with 4.0 coupons nonetheless down 6 ticks (.19). But they might really be doing higher by the point liquidity improves.

11:56 AM

MBS simply turned inexperienced for the primary time since CPI (though CPI losses not but erased).  10yr down 2bps at 2.97%.  Traders rejecting the notion that at this time’s CPI information spells sure doom on inflation.  

01:10 PM

Slightly increased yield at 10yr public sale, however no main influence on buying and selling ranges.  10s are close to home session lows, down 5.7bps at 2.932.  MBS are up practically an eighth, however nonetheless tormented by illiquidity

03:34 PM

Running into modest resistance at the very best ranges of the home session.  MBS and Treasuries have been sideways, for probably the most half, because the final replace simply after the public sale.  Trading ranges are just about the identical.

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