Bonds Shake Off Retail Sales Impact to End Stronger
Tue, Jul 16 2024, 4:16 PM
MBS Recap
Bonds Shake Off Retail Sales Impact to End Stronger
MBS Recap Matthew Graham | 4:14 PM
Bonds Shake Off Retail Sales Impact to End Stronger
This morning's Retail Sales data may have been right in line with forecasts at the headline level, but components of the report were much stronger than expected. As such, the initial sell-off made logical sense, or at least it was able to be explained in hindsight. The rest of the trading day was consistent with 0.0% retail sales growth as bonds slowly regained all of the ground lost in the morning, ultimately hitting the day's best levels just before the 3pm close. MBS underperformed 10yr Treasuries but fared roughly the same as the short end of the yield curve (more on that in today's video).
MBS are back to unchanged levels. 10yr yields are down 3.2 bps at 4.20%.
11:06 AM
Doing a decent job holding in positive territory now. MBS up 3 ticks (.09). 10yr down 3.7bps at 4.196.
02:03 PM
Treasuries back at best levels, down 6bps at 4.173. MBS up an eighth.
03:52 PM
Heading out at best levels with 10yr down 6.8bps at 4.165 and MBS up 6 ticks (.19).
Lock / Float Considerations
Last week's CPI helped solidify the on-again, off-again downtrend in rates that began in May. The burden of proof is increasingly on bond bears and upbeat econ data. That is welcome news for risk-tolerant clients, but it's good to remember that there are always pockets of correction in any trend. The more we push long term lows, the more such risks make sense to consider. Beyond that, "data dependency" reigns supreme.
