CPI Came in HOT and Bonds Reacted Logically

There’s remarkably little else to observe beyond this morning’s initial commentary.  Bonds did exactly what we would have expected based on the sharply higher inflation reading with 10yr yields popping about 10bps higher and MBS shedding 3/8ths of a point, if there’s any new news, it’s simply that bonds managed to avoid any major additional selling pressure after the initial push in the first 2 hours of trading. Yields are closing out the day right in line with the levels seen 10 minutes after CPI came out.

Econ Data / Events

Core Monthly CPI

0.4 vs 0.3 f’cast, 0.2 prev
unrounded, 0.446

Core annual CPI

3.3 vs 3.1 f’cast, 3.2 prev

Market Movement Recap

08:38 AM Obliterated after CPI.  MBS down almost half a point and 10yr up 11bps at 4.639

01:05 PM modest recovery heading into 10yr auction, but losing some ground afterward.  10yr up 11.1bps at 4.638.  MBS down just over 3/8ths. 

02:52 PM Still relatively flat after initial selling.  10yr up 10.7bps at 4.635.  MBS down just over 3/8ths