Best Closing Levels in Nearly a Month

Bonds improved only moderately on Tuesday in a move that’s just as easily chalked up to random holiday-week volatility as any of the day’s data/events.  If we’re determined to give credit to particulars, we can cite things like the 13.5k decline in weekly ADP payrolls, or the market’s favorable reaction to rumors that Kevin Hassett is the front-runner to be the next Fed Chair (Hasset is assumed to be extremely dovish). Most notably, bonds took no damage from another day of upward momentum in stock prices. Yields closed out with 10s right at 4.0%–the best end of day marks since the day before the October 29th Fed announcement (6th lowest close in more than a year).

Econ Data / Events

ADP Employment Change Weekly

-13.5K vs — f’cast, -2.5K prev

Core Producer Prices MM (Sep)

0.1% vs 0.2% f’cast, -0.1% prev

PPI YoY (Sep)

2.7% vs 2.7% f’cast, 2.6% prev

Producer Prices (Sep)

0.3% vs 0.3% f’cast, -0.1% prev

Retail Sales (Sep)

0.2% vs 0.4% f’cast, 0.6% prev

Retail Sales Control Group MoM (Sep)

-0.1% vs 0.3% f’cast, 0.7% prev

FHFA m/m home price change

0.0 

Consumer Confidence 

88.7 vs 93.4 f’cast, 94.6 prev

Pending Home Sales

76.3 vs 74.8 prev

Market Movement Recap

08:35 AM Lots of data but no reaction.  MBS up 2 ticks (.06) and 10yr down 0.7bps at 4.02

10:04 AM holding best levels after more data. MBS up 3 ticks (.09) and 10yr down 2.3bps at 4.005

12:22 PM Rates rallying on Hassett Fed Chair rumors. MBS up 6 ticks (.19) and 10yr down 3.5bps at 3.993

04:24 PM Heading out with MBS still up 6 ticks (.19) and 10yr down 2.6bps at 4.001