Data Dependent Reality Keeps Bonds in Check
Wednesday’s emergency bond buying announcement from the BOE served to cap the death spiral that had been underway in bond yields, but not as an impetus for a sustained push in the other direction. In other words, it only really made a suggestion about the ceiling of the range in the near term, but not the floor. For that, markets turned to this morning’s inflation data from Germany–another all-time high. Yields spiked off the 3.72% technical level, quickly hitting 3.83% before drifting sideways to slightly lower with some help from investors fleeing 2% losses in stocks.
Econ Data / Events
193k vs 215k f’cast
GDP (Q2 Final)
-0.6 vs -0.6 f’cast/prev
Market Movement Recap
08:47 AM Fairly flat to start the overnight session, then much weaker after German inflation data. 10yr up 7.2 bps at 3.814. MBS down just over 5/8ths, but with a quarter point of illiquidity.
11:21 AM Stronger gains as domestic session continues. 10yr now up only 2.2bps at 3.759. MBS still down half a point.
03:15 PM Sideways to slightly stronger with MBS now down only 3/8ths and 10yr yields up only 1.4bps (they were briefly positive just after the noon hour) at 3.751.