Ceiling Defense!

There are two ways to look at today’s weakness in the bond market. On one hand, yields did a great job of holding underneath the 4.34% technical ceiling in 10yr yields despite multiple bounces.  On the other hand, 10yr yields moved quickly up to the 4.34% ceiling and attacked it multiple times.  The first scenario is an optimistic defense.  The second scenario could be viewed as “staging” for a breakout.  Traders likely haven’t determined which scenario they’ll support and are instead waiting to see the lay of the land after next week’s Fed events. 

Econ Data / Events

Import Prices

0.5 vs 0.3 f’cast, 0.1 prev

NY Fed Manufacturing

1.9 vs -10 f’cast, -19 prev

Industrial Production

0.4 vs 0.1 f’cast, 0.7 prev

Consumer Sentiment

67.7 vs 69.1 f’cast
1yr inflation expectations down 0.4
5yr inflation expectations down 0.3

Market Movement Recap

09:14 AM Weaker overnight with Europe, but traders “buying the dip” in bond prices now.  10yr up 2.2bps at 4.308.  MBS down roughly an eighth.

12:00 PM Slightly weaker into the PM hours.  MBS down about a quarter point.  10yr up 4.4bps at 4.33%

04:24 PM 10yr up 4.2bps at 4.328.  MBS down .25 to .375.