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Bond Markets Weaker After Retail Sales Beats Estimates
Posted to: Micro News
Wednesday, March 13, 2013 9:09 AM
After a generally supportive overnight session, helped along by weaker Eurozone factory output and a weak Italian debt auction, domestic bond markets have done a complete 'about-face' following stronger-than-expected Retail Sales data (+1.1 % vs +0.5% Consensus). Economists/Analysts were widely expecting rising gas prices to provide a big boost, and while it did that, even the "excluding Gasoline" metrics were stronger.
10yr Treasuries had drifted down from just over 2.03 in the Asian session to just under 2.0 at the start of the domestic session and immediately moved up to 2.04 following the report MBS began the day a few ticks stronger and are now down 4 ticks at 102-09 vs 102-15 highs.
So far there is hope that we're now looking at a "leveling-off" scenario after coping with the first big hit from data, and the 2.04-2.05 area has been an important technical zone for 10yr Treasuries. If it holds through the domestic stock market open, MBS may well have found their lows at 102-07 at 8:50am. Whether or not it holds is still very much up in the air as we've been sideways near the weakest levels of the day for half an hour now.
Next major data is the 10yr Auction at 1pm though there is a report on Business Inventories out at 10am as well. A democratic budget proposal is also expected at some point during the session.
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