MBS Live Recap: The Return of Logical Economic Cause & Effect?

We've seen plenty of instances of bond markets shrugging off clear suggestions in the economic data, but today wasn't one of them!  Retail Sales and GDP tracking weakened and rates fell.  That's about it, really!

But the recap would look silly as 2 sentences, so here are a few more.

The day began with bonds in just slightly weaker territory.  Retail Sales came out at -0.1 vs a median forecast of +0.2.  That's not the biggest miss in the world, but "negative" vs "positive" tends to have some psychological significance--especially for stocks.  Accordingly, the bond market reaction at 8:30am was minimal, but the 9:30am NYSE open was more pronounced.

Stocks and bond yields moved lower together starting at 9:30am.  Just after 11am, the Atlanta Fed released a revision to their real-time GDP tracking tool showing a drop from 2.5% last week to 1.9% after today's data.  This added fuel to the fires already burning for stocks and bonds. 

10yr Treasuries bounced at the same 2.80% level that prompted the last major bounce on March 1st, but this time around, they didn't retreat nearly as quickly.  Still, that's the level that needs to be broken (and held) before we can talk about the past month being anything other than a sideways consolidation of the sharp losses seen through mid February.