Broad, Negative Momentum is Masking Normal Market Movers

Tuesday featured a much weaker PPI report that failed to inspire any lasting rally in the bond market. While there were a few ways to reconcile that specific turn of events by examining the internal components of the data, it’s also true that bond market momentum has been broadly negative recently.  At times like this, data has to work harder if it wants to push rates lower.  It can even seem like rates move higher whether the data is good or bad. Today’s recap video includes an in-depth assessment of this phenomenon. Long story short, things are still mostly logical, as long as we’re considering all the pieces on the board.

Econ Data / Events

Core PPI M/M

0.0 vs 0.3 f’cast, 0.2 prev

Core PPI Y/Y

3.5 vs 3.8 f’cast, 3.5 prev

Market Movement Recap

08:42 AM initial gains after PPI, but mostly reversed now.  MBS unchanged and 10yr down less than half a bp at 4.781

12:15 PM MBS unchanged and 10yr up 1.5bps at 4.798

03:04 PM nearly unchanged at the close.  MBS up 1 tick (.03) and 10yr unchanged at 4.783