Pre-Fed Paralysis Despite Some Interesting Data

Retail Sales down 1.3% and last month revised up to 0.9%?  Core Producer Prices rising 0.7% in a single month (versus 0.5% forecasts).  How about the eye-watering year-over-year Core PPI number at 4.8%?  While there was perhaps a brief reaction to the 8:30am econ data, it was small and--well, brief.  Bonds spent the entire day trading almost perfectly flat.  We're left to conclude the market has taken its proverbial seat in advance of tomorrow's Fed announcement. 

Econ Data / Events

  • Fed MBS Buying 10am, 1130am, 1pm

  • Retail Sales -1.3 vs -0.8 f'cast, +0.9 prev

  • Core Producer Prices y/y 4.8 vs 4.8 f'cast, 4.1 prev

  • NY Fed Manufacturing 17.4 vs 23.0 f'cast, 24.3 prev

  • Builder Confidence 81 vs 83 f'cast, 83 prev

  • NY Fed manufacturing 17.4 vs 23.0 f'cast, 24.3 prev

  • Industrial Production 0.8 vs 0.6 f'cast 0.1 prev

Market Movement Recap
08:37 AM

Mostly unchanged overnight and not much impact from the data (perhaps just a tad weaker at first).  Trading levels are just a hair worse than 'unchanged.'

12:36 PM

Drifting very gently lower in UMBS 2.0s, now down 2 ticks (0.06).  10yr yields have been flat near unchanged levels.  General pre-Fed paralysis, but susceptible to afternoon illiquidity.

03:39 PM

The day remains completely silent with little hope for anything interesting to happen in the last 80 minutes.  10s are still flat and MBS are still down 2 ticks.