How Does Today's Big Sell-Off Affect The Bigger Picture?

Bonds sold off somewhat aggressively this afternoon following the 30yr bond auction, but not before staging an impressive recovery in the face of the highest core inflation reading in nearly 30 years.  The net effect is a bond market that continues to trade at the lowest yields in 5 months, with the exception of the past week.  Today's video discusses how this impacts the bigger picture.

Econ Data / Events

  • Fed MBS Buying 10am, 1130am, 1pm

  • Monthly CPI 0.9 vs 0.5 f'cast, 0.6 prev

  • Core Annual CPI 4.5 vs 4.0 f'cast, 3.8 prev

Market Movement Recap
08:42 AM

Weaker, then stronger, then weaker after hot inflation data.  10yr yields are up 2 bps at 1.388% and 2.0 UMBS are down 2 ticks (0.06) at 101-06 (101.19).

12:42 PM

bonds recovered all of the post-CPI losses by 10am and have been drifting only modestly weaker since then.  Both MBS and Treasuries are still barely positive on the day.  Strong showing considering the looming 30yr auction at 1pm ET.

01:29 PM

Somewhat brisk weakness following 30yr bond auction.  Both MBS and TSYs at weakest levels of the day.  2.0 UMBS down an eighth in total and more than an eighth from the AM highs.  10yr yields are up 3bps at 1.40%.

03:41 PM

10yr yields still pushing the highest levels of the day, but still holding under the 1.42% technical level.  MBS slipping a bit amid afternoon illiquidity with 2.0 UMBS down a quarter point on the day day and roughly 3/8ths of a point from the AM highs.