Time to Hurry Up and Wait Again

Friday ended up being reasonably pleasant, but mostly uneventful.  Gains were in place from the overnight session on a combination of European economic data and central banker comments.  Geopolitical headlines may have played a role at times, and end-of-week position squaring probably had some impact as well.  None of the above really matters in the bigger picture.  Bonds lost a lot of ground this week as inflation remained higher than the market hoped.  The end.  Now we wait for the next big data with the power to change that bigger picture narrative and that means we’ll be waiting for next month’s inflation reports.  It’s not that 2nd tier reports like next week’s Retail Sales or the following week’s PCE inflation are incapable of moving the needle, but they’d have a hard time moving it enough to shift a bigger picture trend.

Econ Data / Events

Import Prices

0.4 v 0.3 f’cast, 0.3 prev

Export Prices

0.3 vs 0.3 f’cast, 0.7 prev

Consumer Sentiment

77.9 vs 79.0 f’cast, 79.3 prev

1yr inflation expectations

3.1 vs 2.9 prev

5yr inflation expectations

3.0 vs 2.8 prev

Market Movement Recap

09:15 AM Much stronger overnight with gains tracking European bonds.  10yr down 8.8bps at 4.502.  MBS up 10 ticks (.31) in 6.0 coupons and 14 ticks (.44) in 5.5 coupons.

10:23 AM modest push back from 9 to 9:30am, but more modest gains after sentiment data.  10yr down 10bps to 4.493.  MBS up 3/8ths in 5.5 coupons and a quarter point in 6.0s.

04:51 PM Super sideways into 2pm and slightly weaker after that.  MBS still up 7 ticks (.23) in 6.0 coupons and 9 ticks (.28) in 5.5s.  10yr yields down 7.2bps at 4.521