Mixed Reaction to Retail Sales Makes For a Boring Monday

Despite coming in much weaker than expected, Retail Sales (the day’s only big-ticket market mover) didn’t provide much help for bonds. The catch was that the key internal component (the control group, aka retail sales excluding autos/gas/building materials) was stronger than expected. Bonds lost ground on the news, but began to rally about 30 minutes later. The net effect was essentially a restoration of Friday’s average mid-day trading levels, thus making for a ho-hum Monday.  

Econ Data / Events

Retail Sales

0.2 vs 0.6 f’cast, -0.9 prev

Retail Sales “control group”

1.0 vs 0.3 f’cast

NY Fed Manufacturing

-20 vs -0.75 f’cast, 5.7 prev

Business Inventories

0.3 vs 0.3 f’cast, -0.2 prev

NAHB Builder Confidence

39 vs 42 f’cast, 42 prev

Market Movement Recap

08:35 AM Weaker after retail sales, but a hair stronger on the day.  MBS up 1 tick (.03) and 10yr down 0.2bps at 4.311.

12:28 PM Nice recovery for reasons unknown (some big trades at 9:20am, but that’s about it). MBS up 5 ticks (.16) and 10yr down 4.8bps at 4.265

03:31 PM Losing some ground in the PM hours, but still slightly stronger.  MBS up 2 ticks (.06) and 10yr down 0.6bps at 4.307