Jobless Claims May Have Hit Bonds Harder Than Retail Sales

Hot take, and one that’s subject to debate, depending on one’s relationship with the bond market: Jobless Claims coming in at 227k vs 235k f’cast was a bigger problem for bonds than Retail Sales coming in a 1.0 vs 0.3.  No need to discuss.  We’ll give you the answer.  What’s the one other thing the Fed brings up as being important to rate cut timing/magnitude besides inflation?  If you said “the labor market,” you win.  Retail sales certainly didn’t help, and some investors will certainly care more about that, but bond traders who are paying close attention to the Fed just got another strong argument against the low rate vibes in the last big jobs report.  Confirming this is as easy as looking at last week’s even smaller jobless claims beat and seeing quite a similar reaction.

Econ Data / Events

Jobless Claims 

227k vs 235k f’cast, 233k prev

Retail Sales

1.0 vs 0.3 f’cast, 0.0 prev

Philly Fed

-7.0 vs +7.0 f’cast, 13.9 prev

NY Fed Manufacturing

-4.7 vs -6.0 f’cast, -6.6 prev

Market Movement Recap

09:25 AM sharply weaker after econ data.  MBS down more than a quarter point.  10yr up 9.6bps at 3.932

11:30 AM Still near weakest levels with MBS down 3/8ths and 10yr up 9.6 bps at 3.932.  Minimal movement since initial sell-off

02:28 PM Off weakest levels.  MBA down a quarter point and 10yr up 8.7bps at 3.923