All Eyes on CPI

Wednesday morning brings the most consequential economic data of the next several weeks in the form of the Consumer Price Index (CPI) for the month of March.  Bond yields spent today moving back toward the middle of their recent range, perhaps to be in a more nimble position to digest the inflation data.  The report easily has the power to challenge either side of that range, but it would only use that power if it comes in far enough above or below the forecast.  For the record, the line item that matters is CORE MONTH-OVER-MONTH CPI, but some market participants will dig even deeper into that number to track core "services" prices, which are currently taking all the blame for inflation's persistence. 

Market Movement Recap
08:57 AM

Mostly flat overnight session.  Unchanged to start. 10yr now down 1.7bps at 3.398.  MBS down 2 ticks (.06) but illiquid

11:47 AM

Steady but modest weakness all morning.  MBS down just over a quarter point and 10yr up nearly 3bps at 3.443.

01:48 PM

Steady weakness until just after the 3yr Treasury auction.  Recovering a bit now.  10yr up 2.4bps at 3.439.  MBS down 5 ticks (.16).