Early Weakness Erased After Labor Market Warning Signs

The first few hours of domestic trading caused some concern that the post-Fed rate correction was far from over.  At the time, yields were up several bps from closing levels and had just broken above yesterday’s highs.  That’s not the sort of thing you want to see if you’re hoping for bonds to level off.  Everything changed after the Consumer Confidence data.  While this isn’t a report that reliably causes a reaction in the bond market, it’s “labor differential” component is more closely watched recently.  Derived by subtracting the “jobs hard to get” line item from “jobs plentiful,” the differential is increasingly pointing toward a softer job market–something that is well understood to align with more aggressive rate cuts from the Fed. 

Econ Data / Events

FHFA Home Prices

0.1 vs 0.2 f’cast, 0.0 prev

FHFA Annual Change

4.5 vs 5.3 prev

Case Shiller Home Prices

0.0 vs 0.6 prev

Case Shiller Annual Change

5.9 vs 6.5 prev

Consumer Confidence

98.7 vs 103.8 f’cast, 105.6 prev

Market Movement Recap

09:09 AM Steadily weaker overnight.  10yr up 4.7bps at 3.794.  MBS down an eighth.

10:01 AM Bouncing back after Consumer Confidence.  MBS down only 2 ticks and 10yr up 2.5bps at 3.772

03:14 PM trickling to best levels of the day.  MBS up 3 ticks (.09) and 10yr down 1.4bps at 3.733

04:39 PM unchanged since the last update.  Bonds going out at the day’s best levels.