Post Fed Weakness Keeping Markets on Edge
Wednesday’s Fed reaction reverberated through overseas markets overnight. While the Fed didn’t inspire any changes in foreign central bank policy, foreign central banks remained on-message with rate hikes and hawkish comments. Ironically, the overseas bond market weakness (arguably taking cues from US bond weakness) ends up helping to set the tone for early trading in the US. Domestic data didn’t matter despite ISM typically being a market mover (internals offset the headline, and the headline was “close enough”). More importantly, it’s next week’s CPI that dominates the outlook with tomorrow’s jobs report playing a big enough supporting role to make buyers think twice before getting too carried away today.
Econ Data / Events
217k vs 220k f’cast, 218k prev
Unit Labor Costs
3.5 vs 4.1 f’cast, 8.9 prev
Challenger Job Cuts
33.84k vs 29.989k prev
54.4 vs 55.5 f’cast
70.7 vs 67.7 prev
49.1 vs 53.0 prev
Market Movement Recap
10:05 AM Much weaker overnight, but starting to recover after 9:30am NYSE open and weaker ISM data at 10am. 10yr up 7.4bps at 4.17. MBS down just over a quarter point after being down as much as half a point earlier.
11:41 AM Off the highs by about an eighth of a point although it may look bigger than that at times due to illiquidity. 10yr yields are up to 4.153 after hitting lows of 4.128 in domestic trading.
01:23 PM Clawing back toward better levels. MBS down only an eight and 10yr up only 4.5bps at 4.141
04:19 PM Pulling back just a bit from the day’s best levels. MBS down 7 ticks (.23) and 10yr yields up 5.5bps at 4.151%.