Calm Day to End A Calm Week

While Friday itself may not have resulted in a rally for the broader bond market, it was nonetheless just as calm as any other day this week in terms of volatility. That’s a bit more impressive considering it was the only day with big-ticket econ data. Overall, the week was marked by slow, steady gains for no particular reason. With that, the entirety of August, post-jobs-report did exactly what it was supposed to do. Specifically, it held a narrow enough range to avoid challenging the range set by the last jobs report day. The upcoming week–while shorter than normal due to the Labor Day holiday–is infinitely more capable of producing bond market volatility. Even the supporting actors are arguably heavy hitters in terms of econ data. Friday’s jobs report speaks for itself. Bottom line: additional labor market weakness could easily help bonds break new ground at lower yields while unexpected resilience could firmly reinforce recent floors.

Econ Data / Events

Core PCE (m/m) (Jul)

0.3% vs 0.3% f’cast, 0.3% prev

Core PCE Inflation (y/y) (Jul)

2.9% vs 2.9% f’cast, 2.8% prev

Inflation-Adjusted Spending (Consumption) (Jul)

0.5% vs 0.5% f’cast, 0.3% prev

Personal Income (Jul)

0.4% vs 0.4% f’cast, 0.3% prev

Wholesale inventories mm (Jul)

0.2% vs 0.2% f’cast, 0.1% prev

Chicago PMI (Aug)

41.5 vs 46 f’cast, 47.1 prev

Consumer Sentiment (Aug)

58.2 vs 58.6 f’cast, 61.7 prev

Sentiment: 1y Inflation (Aug)

4.8% vs 4.9% f’cast, 4.5% prev

Sentiment: 5y Inflation (Aug)

3.5% vs 3.9% f’cast, 3.4% prev

Market Movement Recap

08:34 AM Minimal movement after PCE data.  MBS are down 2 ticks (.06) and 10yr yields are up 1.4bps at 4.22.

01:03 PM Slightly stronger heading into PM.  MBS down only 1 tick (.03) and 10yr up 1.9bps at 4.224