Bonds Finally Decide They Liked Today's Inflation Numbers

You won't see too many days with a 10+ bp rally in 10yr yields in response to an economic report coming out right in line with expectations.  But that's more or less what happened today.  It wasn't always a given.  There were multiple lead changes in the morning hours, but as the PM hours approached, bulls were increasingly in control as markets bet on a gentler Fed in 2023.  Several Fed speakers commented during the day, but none as bullishly as Collins yesterday.  Markets didn't pay much attention.  Instead, it was the strong 30yr bond auction that extended and solidified the afternoon gains.

Econ Data / Events
    • monthly core CPI
      • 0.3 vs 0.3 f'cast, 0.3 prev
    • monthly headline CPI
      • -0.1 vs 0.0 f'cast, 0.1 prev
    • Jobless Claims
      • 205k vs 215k f'cast
Market Movement Recap
08:38 AM

Big swings after CPI, first weaker, now stronger.  10yr down 4.6bps at 3.497 and MBS up 6 ticks (.19).

09:53 AM

Another lead change with MBS back into negative territory (barely), but down about half a point from highs.  10yr yields are up 2.2bps at 3.563, more than 10bps off the lows. 

01:02 PM

Gradual improvement since the last update and a bit more after the 30yr bond auction.  10yr down 8bps at 3.462 and MBS up a quarter point. 

04:10 PM

Best levels of the day for 10s, down 11.6bps at 3.427.  MBS are up almost half a point.