No Help From Strong Auction or Weak Data; Waiting on The Fed

Bonds shrugged off a big miss in Retail Sales this morning and, despite more of an acknowledgment, did the same after a strong 20yr bond auction at 1pm ET.  Yields held well inside the range set by last Friday's extremes as bonds wait to see what the Fed has to say about higher long-term rates, the Fed Funds Rate forecast, and the prospect of extending a policy (SLR) that has helped big banks buy more Treasuries).  

Econ Data / Events

  • Fed MBS Buying 10am, 1130am, 1pm

  • Retail Sales -3.0 vs -0.5 f'cast, 7.6 prev

  • Industrial Production  -2.2 vs 0.3 f'cast, 1.1 prev

  • Builder Confidence 82 vs 83 f'cast, 84 prev

Market Movement Recap
08:37 AM

paradoxically weaker despite retail sales coming in lower than expected.  10yr gave up modest overnight gains... now unchanged.  MBS are 1-2 ticks (0.03-0.06) worse depending on the moment.

12:44 PM

Weaker since just after 10am in an apparent pre-auction concession (20yr auction at 1pm).  10yr just turned negative and UMBS 2.5 coupons are down 2 ticks (-.06) at the lows of the day.

02:57 PM

Just a bit more weakness versus the last update.  There as a brief correction into positive territory after the strong 20yr auction, but it was traded out in less than an hour.  Now at the weakest levels of the day, albeit only just.