Bonds Unfazed by Econ Data

If you had to guess at the bond market’s response this morning based solely on the outcome of the 8:30am economic data, you’d be very well justified in assuming some selling/weakness.  While that may have been the case for a few moments, it was quickly replaced by bond buying as traders parsed the Retail Sales internals, revisions, and especially the inflation-adjusted spending implications. In a nutshell, the report showed an ongoing downtrend in discretionary consumer spending and that ended up being the trade of the day–even if it wasn’t a super huge trade. This was enough to keep bonds in positive territory for most of the day, despite an afternoon correction back to unchanged levels. 

Econ Data / Events

Retail Sales

0.6  vs 0.1 f’cast, -0.9 prev

Core Retail Sales

0.5 vs 0.3 f’cast, 0.2 prev
last month revised from 0.4

Import prices 

0.1 vs 0.3
last month revised to -0.4 from 0.0

Jobless Claims

221k vs 235k f’cast, 228k prev

Continued Claims

1956k vs 1970k f’cast, 1954k prev

Philly Fed 

15.9 vs -1 f’cast, -4.0 prev

Market Movement Recap

08:39 AM 10yr yields are up 1bp at 4.468. MBS are down 2 ticks (.06)

09:34 AM In positive territory now with MBS up 2 ticks (.06) and 10yr down 1.9bps at 4.44

02:11 PM MBS back to unchanged on the day and down an eighth from highs.  10yr up half a bp at 4.463