Gradual Weakness All Day And a Quieter Calendar Ahead

Today brought the last of the scheduled economic data until the end of next week.  Even then, the data won't be too relevant for at least 2 weeks when the next PCE price index comes out.  Ironically, we've always considered Import Price data to be in the "not too relevant" category, but it appears to have challenged that notion today, thanks in large part to the massive gap versus expectations (0.9 vs 0.3). With that, a number usually disregarded as noise was suddenly worth a small bump in forecast for PCE.  Initial weakness was modest and it leveled off quickly, but the rest of the day saw a slow, directional leak that left MBS down a quarter point.

Econ Data / Events
    • Jobless Claims
      • 222k vs 220k f'cast, 232k prev
    • Philly Fed Index
      • 4.5 vs 8.0 f'cast, 15.5 prev
    • Import Prices
      • 0.9 vs 0.3 f'cast, 0.6 prev
    • Building Permits 
      • 1.44m vs 1.48m f'cast, 1.467m prev
    • Housing Starts
      • 1.36m vs 1.42m f'cast, 1.287m prev
    • Industrial Production
      • 0.0 vs 0.1 f'cast, 0.1 prev
Market Movement Recap
08:35 AM

modest losses after data.  10yr still down 0.2 bps on the day at 4.339 and MBS down 2 ticks (.06).

11:01 AM

MBS right in line with previous update (down 2 ticks or 0.06) but 10yr now up 1.8bps at 4.358.

02:33 PM

Additional weakness now with MBS down roughly a quarter point on the day and 10yr up 3.6bps at 4.376

04:41 PM

Still near the weakest levels with MBS and Treasuries unchanged versus the previous update.