The Day Ahead: European Headlines Take Back Seat to Domestic Econ

After the massive glut of domestic economic data this morning, MBS and Treasuries are understandably under some selling pressure, but have been holding their ground admirably considering some of the data's more economically bullish suggestions. 

Even with Jobless Claims falling to their lowest level in more than 3 years, Empire State Index at its highest since May, and a slightly higher than expected headline PPI (+0.3 vs 0.2 consensus, although the Core was 0.1% lower than consensus), the fact that 10yr yields remain in the low-to-mid 1.9's is either very much impressive or very much an indication of just how important Europe is at the moment. Indeed, little else could account for the uncommonly triumphant performances of this week's core Treasury auctions. 

All that said, yields have been rising steadily since the data and 10's are now close to 1.94 after opening near 1.90. Fannie 3.5 MBS are 2 ticks down on the day, but about 8 ticks down from the more indicative 3pm closing marks. 

Despite data out of Europe overnight (lots of Spanish Auction news and lots of ECB Pres. Draghi comments) we're definitely seeing the domestic session as the chief market mover this morning as opposed to European headlines from the nocturnal session. 

There's more data ahead as well... Treasury International Capital hits in moments at 9am. Industrial Production and Capacity Utilization 15 minutes later at 9:15am, and the "biggie" of the late-morning data, Philly Fed at 10am.

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Here's a quick snap of the current action from the MBS Live Dashboard: