Stronger Today, Sideways in General

Bonds improved overnight on a combination of friendly central bank news in Japan and softer economic data in Europe.  From there, bond traders were relieved that PCE prices weren’t any higher than they were considering the warning embedded in yesterday’s GDP data.  Chicago PMI tried briefly to push toward higher rates, but buyers quickly regained control and didn’t give it up again through the close.  The gains are nice, but rates remain exceptionally range bound in the bigger picture. 

Econ Data / Events

Core PCE inflation m/m

0.3 vs 0.3 f’cast, 0.3 prev

Core PCE inflation y/y 

4.6 vs 4.5 f’cast, 4.7 prev
last month revised up 0.1

Employment cost index

1.2 vs 1.1 f’cast, 1.0 prev

Chicago PMI

48.6 vs 43.5 f’cast, 43.8 prev

Consumer Sentiment

63.5 vs 63.5 f’cast/prev

Market Movement Recap

10:00 AM Stronger overnight. Gains extend slightly after 8:30am data and bouncing back after Chicago PMI.  10yr down 5.9bps at 3.469.  MBS up 7 ticks (.22). 

10:40 AM Recovering now after mid-morning stumble.  10yr down 8bps at 3.448.  MBS up almost 3/8ths.

01:55 PM 5.0 coupons up at least 7 ticks (.22), but would be a bit higher without illiquidity.  10yr yields near lows of day, down 9bps at 3.439.

04:37 PM Month-end positioning and FRC’s after hours slide are keeping bonds bid into the 5pm close.  10yr down 9.8bps at 3.43.  MBS up 3/8ths.