Europe Helps US Bonds Avoid a Bigger Data-Driven Sell-Off

In a vacuum of "data dependency," today should have been worse for bonds.  All three of the morning's economic reports pointed toward higher rates.  After selling off for a few moments, trading levels returned to stronger territory on the day and stayed there for more than an hour.  It wasn't until the afternoon hours that the modest weakness set in.  Incidentally, the afternoon is when Europe is closed for the day and US bonds fend for themselves.  Up until then, European bonds were helping suppress some of the logical weakness in US bonds due to a favorable interpretation of the ECB's comments delivered with today's ECB rate hike.

Econ Data / Events
    • Retail Sales
      • 0.6 vs 0.2 f'cast, 0.5 prev
    • Jobless Claims 
      • 220k vs 225k f'cast, 217k prev
    • Core Producer Prices
      • 0.7 vs 0.2 f'cast, 0.4 prev
Market Movement Recap
08:47 AM

Slightly stronger initially (ECB reaction), but now weaker after data.  10yr up 1bp at 4.264 and MBS down just over an eighth.

12:02 PM

Some ups and downs, but mostly sideways.  10yr up 2.6bps at 4.28.  MBS down 2 ticks (0.06).

03:36 PM

Weaker in the PM but very flat for MBS (down 5 ticks or .16).  10yr up 3.8bps on the day at 4.292.