Happy Thanksgiving From The Bond Market. See You in December

After Tuesday's big CPI reaction, Wednesday brought the week's only other top tier economic report.  Retail Sales may have been negative, but by coming in 0.2% higher than expected, the report paved the way for weakness in the bond market.  Actually, it's probably more accurate to say that yesterday's big rally paved the way for weakness in the bond market and today's Retail Sales data confirmed that sellers need not fear a big, immediate extension of the rally.  Consider that 10yr yields rallied almost 50bps in just 2 weeks.  It makes sense to a moment to cool off.  Unfortunately, due to holiday timing, we may be in for a weird two weeks of "cooling off" with random volatility inside a moderate range--one that is ultimately broken by the first full week of data in December.

Econ Data / Events
    • Core m/m PPI
      • 0.0  vs 0.3 f'cast, 0.2 prev
    • Headline PPI m/m
      • -0.5 vs 0.1 f'cast, 0.4 prev
    • Retail Sales
      • -0.1 vs -0.3 f'cast
      • prev month revised up to 0.9 from 0.7
    • Empire State Manufacturing
      • 9.1 vs -2.8 f'cast, -4.6 prev
Market Movement Recap
09:16 AM

Moderately weaker overnight with additional selling after AM data.  10yr up 7bps at 4.524 and MBS down 3/8ths

12:48 PM

A bit weaker in Treasuries with 10s up 9bps at 4.543.  MBS down a quarter point.

02:46 PM

Very flat!  MBS unchanged from last update.  10yr up 8.6bps on the day at 4.539