Thursday's Data Offered No Objection to Overnight Rally
Thu, Jun 12 2025, 4:13 PM
MBS Recap
Thursday's Data Offered No Objection to Overnight Rally
MBS Recap Matthew Graham | 4:13 PM
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.
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
Lock / Float Considerations
Bonds were refreshingly willing to respond to a big enough beat in CPI. After that, 10yr auction strength helped reinforce a generally supportive backdrop market by recent overhead 10yr yield highs (4.46-ish). If Thursday's PPI confirms the disinflationary momentum to the same extent, we could see an additional reaction, though not likely as big. The more relevant lock/float consideration is that many lenders are noticeably conservative relative to MBS and recent rate sheets (June 4th and 5th are good baselines). This is sometimes seen as an opportunity for risk-tolerant floaters, but it assumes bonds hold gains on Thursday, and that assumes PPI plays ball like CPI (and that's a coin toss).
