Uneventful Week. How About The Next One?

Sure... rates moved a bit higher this week as the bond market continued the process of a modest correction against the Nov/Dec exuberance.  But Nov/Dec was just that: exuberant.  Most of it was justified, but things got a bit too optimistic by the time the Fed's dot plot came out.  Moreover, additional gains would have required the type of economic data that we just didn't see over the past 4 weeks.  With all that in mind, what is the Fed going to be able to say to surprise us next week?  Probably not much, but markets will immediately begin extrapolating any big beats/misses in the big economic reports to its assessment of what the Fed will say next time.

Econ Data / Events
    • monthly CORE PCE
      • 0.2 vs 0.2 f'cast, 0.1 prev
    • annual CORE PCE
      • 2.9 vs 3.0 f'cast, 3.2 prev
Market Movement Recap
08:53 AM

Flat overnight.  2-way volatility after PCE data.  MBS roughly unchanged.  10yr down less than 1bp at 4.112

11:19 AM

position-driven selling into the 9:30am NYSE open, but recovering a bit since then.  10s up 2.3bps at 4.143.  MBS down 3 ticks (.09).

12:58 PM

sideways after modest recovery.  MBS down 2 ticks (.06) and 10yr still at 4.143.