MBS & US Treasury Markets
1/14 8:56:53PM EST : Delayed Data

The Producer Price Index (PPI) may not be nearly as much of a market mover as the Consumer Price Index (CPI), but it has proven capable of producing logical reactions in the past when it's come in much higher or lower than expected. Today's installment was much lower than expected--something that should be good for bonds. While there was a brief, initial rally, it was quickly erased and bonds returned to relatively unchanged levels.

20250114 open1.png

The easiest explanation is that the market is preoccupied with CPI and there's limited directional correlation on any given individual month.

20250114 open3.png

The deeper explanation is that the PPI components that flow through to consumer inflation didn't miss the market as much as the headline suggested.

20250114 ppi to pce.png

08:42 AM

initial gains after PPI, but mostly reversed now.  MBS unchanged and 10yr down less than half a bp at 4.781

12:15 PM

MBS unchanged and 10yr up 1.5bps at 4.798

03:04 PM

nearly unchanged at the close.  MBS up 1 tick (.03) and 10yr unchanged at 4.783