Not Too Soft, Jerome

Bonds began the day in weaker territory but up until the AM econ data, yields were no higher than yesterday's highs.  After data, it was off to the races for sellers, but not in a straight line.  Jobless Claims data was the big issue as it came in much lower than expected and on NFP survey week to boot.  The implication is a higher risk of a big NFP number in 2 weeks.  Bonds progressively traded that in, but weren't exactly sure how to go about it given the state of flux for the Fed's rate hike outlook after the most recent CPI data.  Looked at another way, CPI argued for a softer stance from the Fed next week whereas today's data says "not too soft, Jerome!" 

Econ Data / Events
    • Jobless Claims
      • 228k vs 242k f'cast, 237k prev
    • Philly Fed
      • -13.5 vs -10 f'cast, -13.7 prev
    • Existing Home Sales
      • 4.16m vs 4.2m f'cast, 4.3m prev
Market Movement Recap
08:54 AM

Weaker overnight with Treasuries selling more aggressively than EU bonds. More weakness after data.  10yr up 7.7bps at 3.825.  MBS down 3/8ths

10:18 AM

Additional weakness.  10yr up 10.4bps at 3.852.  MBS down almost 3/4ths, but illiquidity is magnifying apparent losses.

03:11 PM

Modest gains for MBS heading into the close.  5.5 down 11 ticks (.34).  10yr up 10.8bps at 3.856.  MBS outperforming 

05:27 PM

MBS closed with only a 3/8ths point loss.  10s underperformed, up 11bps at 3.858.