Bonds Shake Off Retail Sales Impact to End Stronger

This morning’s Retail Sales data may have been right in line with forecasts at the headline level, but components of the report were much stronger than expected.  As such, the initial sell-off made logical sense, or at least it was able to be explained in hindsight.  The rest of the trading day was consistent with 0.0% retail sales growth as bonds slowly regained all of the ground lost in the morning, ultimately hitting the day’s best levels just before the 3pm close.  MBS underperformed 10yr Treasuries but fared roughly the same as the short end of the yield curve (more on that in today’s video).

Econ Data / Events

Retail Sales

0.0 vs 0.0 f’cast, 0.1 prev

Retail Sales Excluding Gas and Autos

+0.8, highest since January

NAHB Housing Market Index

42 vs 44 f’cast, 43 prev

Market Movement Recap

08:35 AM  MBS are back to unchanged levels. 10yr yields are down 3.2 bps at 4.20%.

11:06 AM Doing a decent job holding in positive territory now.  MBS up 3 ticks (.09).  10yr down 3.7bps at 4.196.

02:03 PM Treasuries back at best levels, down 6bps at 4.173.  MBS up an eighth.

03:52 PM Heading out at best levels with 10yr down 6.8bps at 4.165 and MBS up 6 ticks (.19).