Strong Retail Sales Data and Logical Consequences

Today's morning commentary may as well be the recap.  Very little happened that hadn't already happened right out of the gate this morning.  In case you missed it, that involved sharply stronger Retail Sales data and a logical bond market reaction.  Not only did the most current data crush the forecast, but last month was revised another 0.2 higher as well.  Internal components were even stronger than the headline, and inflation-adjusted sales logged their third straight month in the black--each stronger than the last.  Yields shot higher immediately and stayed in the same, terrible range all day.  MBS tanked and mortgage rates hit new multidecade highs.  This too shall pass, but it didn't start passing today.

Econ Data / Events
    • Retail Sales
      • 0.7 vs 0.3 f'cast
      • last month revised up 0.8 vs 0.6
    • Excluding Autos
      • 0.6 vs 0.2
    • Excluding Autos, Gas, Building Materials
      • 0.6 vs 0.1 f'cast
    • NAHB Builder Confidence
      • 40 vs 44 f'cast, 44 prev
    • Industrial Production
      • 0.3 vs 0.0 f'cast, 0.0 prev (revised from 0.4)
Market Movement Recap
08:44 AM

Steadily weaker overnight with additional selling after Retail Sales.  10yr up 9.6bps at 4.796.  MBS down half a point.

01:12 PM

Broadly flat after additional weakness into the 10am hour.  MBS down just over half a point and 10yr up 13.4bps at 4.834

03:54 PM

Little changed since the last update.  MBS still down half a point to 5/8ths depending on the coupon.  10yr up 13.4bps at 4.834 after a few ups and downs over the past 2 hours.