Higher Inflation Expectations Keep Yields Range-Bound

It's not as if bond yields stood any real chance of breaking outside the week's prevailing range based on today's starting point, but by losing a modest amount of ground, they ended up staying even closer to the 4.50% psychological level ahead of next week's big CPI revelation.  Today's driver was the Consumer Sentiment data.  While the headline was weak (which would be good for bonds, all other things being equal), the inflation expectation component got the market's attention, pushing yields higher and stocks lower after 10am.  The selling was brief and the afternoon was on cruise control at modestly weaker levels.

Econ Data / Events
    • Consumer Sentiment
      • 67.4 vs 76.0 f'cast, 77.2 prev
    • 1yr inflation expectations
      • 3.5 vs 3.2 prev
    • 5yr inflation expectations
      • 3.1 vs 3.0 prev
Market Movement Recap
10:24 AM

Moderately weaker overnight and no help from sentiment data.  MBS down 5 ticks (.16) and 10yr up 4.1bps at 4.497

11:25 AM

A bit of additional weakness as MBS get caught up with TSY losses.  10yr still up just over 4bps at 4.498, but MBS now down 7 ticks (.23).

03:44 PM

Losses cooled down by 1pm. Sideways and stable since then.  MBS down 6 ticks (.19) and 10yr up 4.7bps at 4.503