Nice Intraday Bounce, But No Implication For Bigger Picture

Bonds began the day losing ground following hotter inflation data in Europe.  The GDP contraction offered brief benefit, but yields moved to new highs after traders digested the internals.  Thankfully those highs weren't much higher than pre-GDP levels and they helped set a sideways range that remained intact for most of the day.  By the afternoon, bonds were challenging the stronger side of that range and MBS actually broke into positive territory resulting in multiple positive reprices.

Econ Data / Events

  • Fed MBS Buying 10am, 11:30am, 1pm

  • GDP ................................-1.4 vs +1.1 f'cast, 6.9 prev
    Consumer Spending........... 2.7 vs 2.5 prev
    Deflator (inflation metric) ....8.0 vs 7.3 f'cast
    Jobless Claims ...................180k vs 180k f'cast, 185k prev

Market Movement Recap
08:58 AM

Flat overnight, weaker after German inflation data at 5am, quick recovery after GDP, and now back to the weakest levels of the day with 10yr up more than 5bps at 2.884 and MBS down 3/8ths.

12:27 PM

Wide, choppy, sideways range all morning, but a bit of a selling trend in the past hour.  Treasuries near weakest levels and MBS down 6 ticks (.19) from AM highs.  

03:16 PM

Holding ground fairly well now with 10yr yields up only 2.7bps at 2.85 and UMBS 4.0 coupons down only 1 tick (0.03).  Best levels of the day for MBS.

04:19 PM

NYSE close = stocks and yields moving lower together.  MBS still outperforming with 4.0 coupons now 1 tick into POSITIVE territory (+0.03).