Stable and Sideways Now That Rates Are Back in The Range
The past two days had seen more volatility in rates markets as traders reconciled lower inflation readings and upbeat economic data. The net effect was a fairly quick move back up into the familiar old “sideways, volatile range.” As rates hit the 2.91% pivot point yesterday (and again overnight), there was immediately less of an impulse to sell. As they drifted back down to the 2.85% technical level, there was less of an impulse to buy. This resulted in a surprisingly calm, sideways Friday afternoon.
Econ Data / Events
Import Prices -1.4 vs -1.0 f’cast, 0.3 prev
Export Prices -3.3 vs -1.1 f’cast, 0.7 prev
Consumer Sentiment 55.1 vs 52.5 f’cast, 51.5 prev
Expectations 54.9 vs 48.4 f’cast, 47.3 prev
1yr Inflation outlook up 0.1
5yr Inflation outlook down 0.2
Market Movement Recap
08:56 AM Slightly stronger overnight, mostly during Asian hours. Choppier and more sideways in Europe. Now holding gains in early domestic trading. 10yr down 3.5bps at 2.857 and MBS up 2 ticks (0.06).
10:08 AM MBS down a quick eighth after Consumer Sentiment data. Biggest surprise: “expectations” index at 54.9 vs 47.3 prev.
01:49 PM Bonds holding ground fairly well with modest gains. MBS are off the earlier lows, up roughly an eighth on the day, and flat for 2-3 hours. 10yr yields are down 4bps and trading calmly.
05:20 PM Out the door in sharply sideways fashion. MBS traded a 3 tick (0.09) range for the past 7 hours, and wasn’t much outside that even at the extremes.