UK Inflation Data Steals Show From Domestic Market Movers

Today's Retail Sales report and Fed Minutes were supposed to be the big ticket market movers for the bond market, but neither had a big impact relative to the day's range.  Weakness came courtesy of a surge in UK inflation that had bond traders selling first and asking questions later.  One of the questions was "have we sold off enough in August to get back in a more nimble stance?"  Any time 10yr yields hit 2.91% today, the answer seemed to be "yes," but keep in mind that the broader, sideways, volatile range stretches up to a ceiling of 3.07, at minimum.  

Econ Data / Events
    • Retail Sales
      • 0.0 vs 0.1 f'cast, 0.8 prev
    • Core Retail Sales 
      • 0.8 vs 0.6 f'cast, 0.8 prev
Market Movement Recap
08:41 AM

Moderately to sharply weaker overnight on selling momentum kicked off by hotter UK inflation data.  US retail sales data hasn't helped much.  MBS still down almost a half point and 10yr yields up 8.2bps at 2.889.

11:03 AM

Bonds continued losing some ground in after the last update, but found their footing shortly thereafter.  MBS have been relatively flat since just after 9am with 4.0 coupons down 15 ticks (.47).  10yr yields are up 8.7bps at 2.895.

01:28 PM

Renewed weakness after 20yr bond auction.  10yr up almost 10bps trading just under 2.91.  MBS down almost 5/8ths on the day.

02:11 PM

Moderately friendly relief rally after Fed Minutes contain no whammies.  MBS down only 13 ticks (.41) now and 10yr back under 2.89.