Thursday’s Data Offered No Objection to Overnight Rally

Thursday’s PPI was just as tame as Wednesday’s CPI and, for a moment, it looked like bonds were going to offer an encore performance of the post-CPI rally.  But in Thursday’s case, bonds had already rallied nearly that much in the overnight session.  We’re inclined to view this through the lens of Thursday’s data standing aside for the momentum created by Wednesday’s data.  In other words, CPI prompted a lead-off rally and PPI didn’t push back in the other direction.  We can also give some credit to Jobless Claims where the continued claim number pushed up to another cycle high. Yields didn’t stray far from where they were 10 minutes after the morning’s data.  

Econ Data / Events

Core MM PPI

0.1 vs 0.3 f’cast, -0.2 prev

Core YY PPI

3.0 vs 3.1 f’cast, 3.2 prev

Monthly Headline PPI

0.1 vs 0.2 f’cast, -0.2 prev

Jobless Claims

248k cs 240k f’cast, 248k prev

Continued Claims

1956k vs 1910k f’cast, 1902k prev

Market Movement Recap

08:36 AM MBS up a quarter point and 10yr down 6.2bps at 4.362 (most of these gains were before the data).

01:24 PM No sustained improvement despite decent 30yr auction.  MBS up 9 ticks (.28) and 10yr down 5.5bps at 4.368

04:12 PM Heading out close enough to best levels with MBS up 9 ticks (.28) and 10yr yields down 6.7bps at 4.356