Bonds Snap Back to Reality on Higher Core Services CPI

Even before this week’s rally began, we knew to be on the lookout for brief pockets of lower bond yields.  These corrections are common during selling sprees.  They serve as periodic pressure releases but are almost always meaningless when it comes to redefining any big picture trend. Today’s sell-off drove that point home and was perhaps easier for traders to facilitate in light of the last two days of gains.  Still, the selling required a catalyst and it found one in the “core services” component of today’s CPI report.  This is exactly the place the Fed wants to see better progress on inflation, and the numbers showed the opposite of progress. 

Econ Data / Events

Core CPI m/m

0.3 vs 0.3 f’cast, 0.3 prev

Core CPI y/y

4.1 vs 4.1 f’cast, 4.3 prev

Headline CPI m/m

0.4 vs 0.3 f’cast, 0.6 prev

Jobless Claims

209k vs 210k f’cast, 209k prev

Market Movement Recap

09:31 AM Moderate weakness after data.  10yr up 4.6bps at 4.604 and MBS down just under a quarter point.

11:37 AM Additional weakness.  MBS down half a point.  10yr up 10.6bps at 4.664.

04:10 PM leveling off at the weakest levels of the day.  10yr up 15bps at 4.07.  MBS down just over 5/8ths. 

Published On: October 12, 2023 / Categories: Mortgage News /