Heading into today's data, we knew there was a possibility of two separate reactions--one for the top line CPI numbers and one for a deeper look at the internal components. Those internals show that tariffs are having an impact even though it was a smaller impact than many forecasters were expecting. Bonds didn't seem to care at first. When a new glut of trades came online at the 9:30am NYSE open, that changed. Both stocks and bonds sold off sharply starting at 9:30am and this move looks far more convincing that the initial rally.
after CPI 10yr yields are down 2.9bps at 4.406 and MBS are up an eighth
09:45 AM
10yr unchanged 4.434. MBS also unchanged and down just over an eighth from the highs.
11:29 AM
weakness continues. MBS down 6 ticks (.19) and 10yr up 4.7 bps at 4.482
02:32 PM
Steady, slight selling continues. MBS down 7 ticks (.22) and 10yr up 5.3bps at 4.488
Lock / Float Considerations
Tuesday's CPI put spin on the ball. Unfortunately, it was the wrong kind of spin for fans of low rates. Fortunately, it makes it a bit easier to pick a side in the lock/float debate until this wave of selling pressure subsides.
