Weird Reaction to Durable Goods, But Generally Slow and Sideways

The economic data drought finally began to dry up this morning with Durable Goods being the first remotely relevant report since last Thursday.  Results were mixed for the bond market with most of the normal line items seemingly being good for bonds. The more obscure “core capital goods shipments” was bad for bonds due to its implications for Q1 GDP.  While that’s not the GDP data coming out this week, it was still enough to reverse the microscopic gains seen in the first minute or two of the trading reaction.  Of course all of the above is much ado about nothing in the bigger picture as bonds must continue waiting for truly meaningful data.  There was similarly uneventful volatility surrounding the 7yr Treasury auction, but yields remained under the prevailing technical ceiling at 4.32%.

Econ Data / Events

Durable Goods

-6.1 vs -4.5 f’cast, -0.3 prev

Durables excluding defense and aircraft

0.1 vs 0.1 f’cast, -0.6 prev

Consumer Confidence 

106.7 vs 115 f’cast, 110.9 prev

FHFA Home Prices y/y

6.6 vs 6.7 prev

Case Shiller Home Prices y/y

6.1 vs 6.0 f’cast, 5.4 prev

Market Movement Recap

12:16 PM A hair stronger overnight, and now a hair weaker after AM econ data (not necessarily because of it).  10yr up 1.6bps at 4.299.  MBS down 2 ticks (.06).

01:46 PM Decent initial reaction to decent 7yr auction, but giving up that improvement now.  10yr up 1.2bps at 4.295.  MBS down 2 ticks (.06).

02:30 PM Weakest levels of the day with MBS down 5 ticks (.16) and 10yr up 2.5bps at 4.307.  

04:00 PM Additional selling just before 3pm, but off the weakest levels now with MBS down an eighth.  10yr up 2.8bps at 4.311 (had been up to 4.321 briefly).

Published On: February 27, 2024 / Categories: Mortgage News /