Mediocre Data Has Done Nothing to Help Bonds

Granted, this week’s slate of economic data isn’t on quite the same level as NFP week, but neither have offered any seriously upbeat reports. Today’s PPI and yesterday’s CPI both hit forecasts at the monthly level.  Jobless Claims certainly weren’t bullish for the labor market. Bond traders even jumped on a quick AM rally in response to the 8:30am data (both today and yesterday). But like yesterday, it was over soon after it began and the rest of the day was dominated by steady selling.  We can blame heavy selling in Europe for the timing of today’s reversal, but Treasury traders kept the bad times rolling well after EU markets closed.

Econ Data / Events

Core Producer Prices MM

0.2 vs 0.2 f’cast, 0.3 prev

Core Producer Prices YY

3.4 vs 3.2 f’cast, 3.1 prev

Jobless Claims

242k vs 220k f’cast, 224k prev

Market Movement Recap

09:35 AM Slightly weaker overnight, recovering a bit after data and weakening a bit with EU markets after ECB announcement.  MBS down 1 tick (.03) and 10yr up just under 1bp at 4.292

02:02 PM MBS now down 6 ticks (.19) on the day 10 yr yields are also up to new highs for the day at 4.320%.

03:26 PM Weaker still… MBS down 9 ticks (.28) and 10yr up 4.3bps at 4.327