CPI Just as Risky as Usual–Perhaps More So

Bonds sold off on Thursday in a move that was as easy to chalk up to position-squaring ahead of CPI than anything else. The recent uptick in oil prices is also worth noting, but only if we remember that correlation is not always causality when it comes to that pairing. Given the absence of big ticket econ reports during the shutdown, Friday morning’s CPI is getting plenty of attention–more than it deserves, to be sure, and much more than it would outside a shutdown. That said, the data is just as “live” in terms of its potential to cause volatility.

Market Movement Recap

09:32 AM Slow, steady selling overnight and flat so far at weaker levels.  MBS down 3 ticks (.09) and 10yr up 3.3bps at 3.98

11:20 AM MBS down 6 ticks (.19) and 10yr up 4.8bps at 3.995

01:17 PM Flat at weaker levels.  MBS down 6 ticks (.19) and 10yr up 4.9bps at 3.996