Stunning Display of Holiday Trading Weirdness

GDP for Q3 may be ancient history as far as econ data goes, but markets didn’t seem to think so in the hour following this morning’s release. GDP was much stronger than expected and bonds traded it like it was a legit market mover. But most of the reaction was a holiday-induced amplification of what might have otherwise only caused barely-noticeable weakness in bonds. That point was driven home by the end of the day as both Treasuries and MBS returned to unchanged levels.  

Econ Data / Events

ADP Employment Change Weekly

11.5K vs — f’cast, 16.25K prev

Core CapEx (Oct)

0.5% vs — f’cast, 0.9% prev

Core PCE Prices QoQQ3

2.90% vs 2.9% f’cast, 2.6% prev

Corporate profitsQ3

4.4% vs — f’cast, 0.2% prev

Durable goods (Oct)

-2.2% vs -1.5% f’cast, 0.5% prev

Industrial Production (Oct)

-0.1% vs 0.1% f’cast, 0.1% prev

Industrial Production (Nov)

0.2% vs — f’cast, -0.1% prev

CB Consumer Confidence (Dec)

89.1 vs 91 f’cast, 88.7 prev

Market Movement Recap

08:35 AM MBS are now down 1-2 ticks (.03-0.06) and 10yr yields are up roughly 1bp at 4.169

11:46 AM Bonds sold off a bit more after the last update, but are now back to similar levels with MBS down 2 ticks (.06) and 10yr up 1.1 bps at 4.17

02:00 PM Sideways since last update. MBS down 2 ticks (.06) and 10yr up 0.7bps at 4.167