Stale PCE Helped; Fresher Version Up Next

The quarterly vs monthly PCE reports are potential sources of confusion for rate watchers.  To be fair, only the monthly version is a dedicated report.  The quarterly version is simply the sum of the 3 monthly reports + revisions, presented with the GDP release and revisions.  That’s the one that came out this morning, showing that Jan-Mar inflation was another 0.1% lower than initially reported.  Does that have a bearing on tomorrow’s dedicated monthly PCE numbers?  Not this time…  While that was the case last month (because the monthly report was for March… one of the months in Q1), tomorrow’s PCE inflation data is for April.  Thus, it is more interesting and more timely.  If today’s stale update was worth a modest rally, it’s a clue as to Friday’s potential volatility in the event of another deviation from expectations. 

Econ Data / Events

Jobless Claims

219k vs 218k f’cast, 216k prev

Core PCE Q/Q

3.6 vs 3.7 previously 

GDP, Q1 1st revision

1.3 vs 1.3 initial

Pending Home Sales 

-7.7% vs -0.6% f’cast, +3.6% prev

Market Movement Recap

08:53 AM moderately stronger overnight with additional gains after data.  MBS up 7 ticks (.22) and 10yr down 4.2bps at 4.573

11:17 AM additional gains with MBS up 9 ticks (.28) and 10yr down 6.5bps at 4.55

01:33 PM Sideways at the best levels.  MBS up 10 ticks (.31) and 10yr down 7.2bps at 4.543

03:41 PM Still fairly flat, but off the best levels.  MBS up 9 ticks (.28) and 10yr down 6.2bps at 4.553