MBS MID-DAY: Holding Gains After Weaker Retail Sales Data
We've had a nice little break from the recent norm today. Domestic economic data is actually responsible for the lion's share of bond market movement this morning. It probably doesn't hurt that Greece-related headlines are at least 95% lower than yesterday's (there have been only a handful today vs hundreds yesterday). Even then Retail Sales is a respectable enough data set when it comes to market moving potential, and this morning's was unequivocally weak.
Versus a median forecast of +0.2, the headline came in at -0.3. Excluding the automotive sector, sales were down -0.1 vs a +0.5 forecast. The most stripped-down reading (also referred to as "the control group," which factors out autos/gas/building supplies/food services) fell -0.1 versus +0.4 forecasts and +0.7 previously.
10yr yields were roughly unchanged on the morning but fell a quick 4bps after the data. MBS rose from 102-15 in Fannie 3.5s to 102-20, but were already up 5 ticks before the data. Both have maintained those initial gains after some volatility surrounding the NYSE open. A modest advance in stocks looked like it would drag bond yields higher, but the lever disengaged at 10:30am (meaning stocks kept drifting higher while bonds held their ground).
MBS | FNMA 3.0 99-04 : +0-10 | FNMA 3.5 102-20 : +0-10 | FNMA 4.0 105-20 : +0-09 |
Treasuries | 2 YR 0.6410 : -0.0360 | 10 YR 2.4030 : -0.0430 | 30 YR 3.2000 : -0.0270 |
Pricing as of 7/14/15 11:56AMEST |