Early Close and a 3-Day Weekend

Cash bond trading closes at 2pm ET today.  Data coincided with brief, modest volatility this morning, but it only lasted for 30 minutes.  After that, bonds have been and will continue to be at the mercy of late December trading motivations which tend to create random, illiquid, low-volume movement that defies any of the typical reaction functions.  In other words, whatever we’re seeing on the screen today could be considered noise as we wait for cleaner signals in early January.

Econ Data / Events

Durable Goods 

5.4 vs 2.2 f’cast, -5.1 prev

Core Durable Goods

0.8 vs 0.2 f’cast, -0.6 prev

Core m/m PCE Inflation

0.1 vs 0.2 f’cast, 0.2 prev

Core y/y PCE

3.2 vs 3.3 f’cast, 3.5 prev

Market Movement Recap

09:16 AM Slightly stronger overnight, initially weaker after data, but back in stronger territory now.  10yr down 2.5bps at 3.869 and MBS up 1 tick (.03).

12:01 PM weakest levels after adjusting for liquidity.  MBS down 1 tick (0.03).  10yr yield up 2.2bps at 3.914.