Was The Fed Pivot a Surprise?

There’s been quite a bit of discussion in the news and on MBS Live surrounding a few interesting questions regarding the Fed’s apparent pivot/shift on the rate outlook.  Does the Fed think about politics?  Was the pivot a surprise?  Was it justified?  If it’s an unjustified surprise, is it therefore political?  etc.  Because today’s trading session offered so very little in terms of market movement to analyze, we’ve instead turned our attention to addressing those more interesting questions in today’s recap.

Econ Data / Events

Jobless Claims

205k vs 215k f’cast, 203k prev

Philly Fed Index

-10.5 vs -3.0 f’cast, -5.9 prev

Q3 Final GDP

4.9 vs 5.2 f’cast
deflator 3.3 vs 3.5 f’cast

Market Movement Recap

08:38 AM unchanged to a hair weaker overnight, but now stronger after data.  10yr down 1.5bps at 3.838.  MBS up 2 ticks (0.06).

10:12 AM Gains turning to losses.  MBS down 3 ticks (.09) and 10yr up 2.8bps at 3.881.

01:26 PM weakest levels of the day.  10yr up 4.8bps at 3.901. MBS down 7 ticks (.22).

02:52 PM Off the weakest levels.  MBS down only 3 ticks (.09) and 10yr up 4bps at 3.894.