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Afternoon Weakness in Bonds Despite Lower Oil Prices. Will CPI Matter?
Afternoon Weakness in Bonds Despite Lower Oil Prices. Will CPI Matter?
Days like today are a problem for a "set it and forget it" mentality when it comes to energy prices and the bond market. On many occasions since the beginning of last week, the correlation between oil prices and bond yields has been plain to see. Additionally, oil price volatility has been the only way to explain much of the movement in bonds. Now this afternoon, bond yields broke higher despite no clear cues from oil. We are left to lean on things like a weak 3yr Treasury auction and general supply pressures surrounding a large corporate bond issued by Amazon. Tomorrow brings CPI--usually a relevant market mover, but unlikely to carry as much weight given the current backdrop.
Weaker overnight vs Monday's late-day rally levels. Stronger vs 3pm close. 10yr at 4.124. MBS down 19bps from 5pm, but up a few bps vs 3pm.
MBS down 5 ticks (.16) on the day and 10yr up 2.5bps at 4.12
MBS down 3 ticks (.09) and 10yr up 1.6bps at 4.112
MBS down 7 ticks (.22) and 10yr up 4.6bps at 4.142
Afternoon Weakness. Will CPI Matter
| Time | Event | Period | Actual | Forecast | Prior |
|---|---|---|---|---|---|
| Wednesday, Mar 11 | |||||
| 12:00AM | Roll Date - UMBS 30YR | ||||
| 7:00AM | Mar/06 MBA Purchase Index | Mar/06 | 158.9 | ||
| 7:00AM | Mar/06 MBA Refi Index | Mar/06 | 1637.5 | ||
| 7:00AM | Mar/06 Mortgage Market Index | Mar/06 | 377.5 | ||
| 8:30AM | Feb y/y Headline CPI (%) | Feb | 2.4% | 2.4% | |
| 8:30AM | Fed Bowman Speech | ||||
| 8:30AM | Feb m/m Headline CPI (%) | Feb | 0.3% | 0.2% | |
| 8:30AM | Feb y/y CORE CPI (%) | Feb | 2.5% | 2.5% | |
| 8:30AM | Feb m/m CORE CPI (%) | Feb | 0.2% | 0.3% | |
| 10:30AM | Mar/06 Crude Oil Inventory (ml) | Mar/06 | 2.8M | 3.475M | |
| 1:00PM | 10-yr Note Auction (bl) | 39 | |||
| 2:00PM | Feb Federal budget (bl) | Feb | $-75.85B | $-95B | |
| Thursday, Mar 12 | |||||
| 8:30AM | Jan Housing starts number mm (ml) | Jan | 1.35M | 1.404M | |
| 8:30AM | Jan Trade Gap (bl) | Jan | $-66.6B | $-70.3B | |
| 8:30AM | Mar/07 Jobless Claims (k) | Mar/07 | 215K | 213K | |
| 8:30AM | Feb/28 Continued Claims (k) | Feb/28 | 1850K | 1868K | |
| 11:00AM | Fed Bowman Speech | ||||
| 1:00PM | 30-Yr Bond Auction (bl) | 22 | |||
| 1:00PM | 30-Year Bond Auction | 4.750% | |||
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