The Best Half Point MBS Sell-Off
On probably any other day, a half point sell-off in MBS would be bad news. And on many days in the past, a half-point sell-off has been VERY bad news. Today, however, it’s arguably a good thing. This paradox is only made possible by the 2+ point rally that took place after Thursday’s CPI data. Today’s flat trading trajectory(after overnight losses) offers some sense of confirmation for last week’s rally, but the pull-back from the best levels suggests additional gains will need additional motivation.
Econ Data / Events
monthly CORE CPI
0.3 vs 0.5 f’cast, 0.6 prev
yearly CORE CPI
6.3 vs 6.5 f’cast 6.6 prev
monthly HEADLINE CPI
0.4 vs 0.6 f’cast, 0.4 prev
yearly HEADLINE CPI
7.7 vs 8.0 f’cast, 8.2 prev
Market Movement Recap
08:44 AM Only slightly weaker to start the day. No distinct trend yet. 10s up 3bps at 3.88. MBS down 3/8ths of a point.
11:56 AM Some weakness in the 10am hour, but holding and recovering slightly now. MBS back to 3/8ths lower on the day after being down half a point. Treasuries right in line with previous levels as well (3.88).
04:12 PM Very flat and boring in the bigger picture. The best and most boring half-point sell-off we can remember. 10yr still within a bp of AM levels at 3.872.