Focus Shifts to Next Week’s High Stakes CPI

Bonds lost ground at the fastest pace of the week on Friday, but even that ended up being insignificant in the bigger picture. The bottom line is that this week’s trading helped solidify and consolidate the gains seen after last week’s jobs report. With nothing of note on tap today, focus quickly shifted to the risks/opportunities inherent in next Tuesday’s CPI report–one of two key players when it comes to determining the next big move for rates (the other being the next jobs report in early September). Higher inflation would suggest bonds erase more of their post-NFP gains whereas lower inflation would argue for another challenge to the 10yr technical floor at 4.20%. 

Econ Data / Events

Jobless Claims

226k vs 221k f’cast, 219k prev

Continuing Claims

1974k vs 1950k f’cast, 1936k prev

Market Movement Recap

10:11 AM Losing ground fairly steadily this morning.  MBS down an eighth and 10yr up 2bps at 4.275

01:01 PM Flat after initial selling.  MBS down 3 ticks (.09) and 10yr up 2.9bps at 4.284

03:24 PM Treasuries heading out at weakest levels with 10yr up 3.1bps at 4.286.  MBS still steady with a 3 tick (.09) loss.