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Weaker Overnight, Stronger After Data, Hitting Resistance Now
Posted to: Micro News
Friday, September 13, 2013 9:33 AM
It's been a surprisingly straightforward overnight and early morning session so far despite the volatility. Little was happening during Asian hours until Japan's Nikkei newspaper published a story quoting inside, unnamed sources, saying that Obama would nominate Summers for Fed chief. This wasn't the garden variety op-ed, but a claim of inside info.
Stocks sold-off quickly on that news and bond yields rose (as Summers is generally regarded as less QE friendly than Yellen). Both spent the rest of the evening recovering back toward Thursday's latest levels. As domestic traders were sitting down, another newswire came out from Dow Jones saying Obama hasn't decided yet.
Bond markets rallied back to their best overnight levels on that news, and then rallied some more after a weaker-than-expected Retail Sales number (+.2 vs +.4 forecast). Offsetting the bond bullishness was the face that last month's sales were revised higher by a similar amount today's missed. Essentially, it's just not quite enough "bad news" to clearly suggest the Fed reconsiders whatever tapering timeline they're currently considering.
As such the rally hit the skids before dipping below 2.88 in 10yr yields and before Fannie 4.0 MBS broke above their highs from yesterday. Both are currently near unchanged levels, but Fannie 4.0s are doing slightly better--3 ticks up currently at 102-18. Consumer Sentiment rounds out the day's data at 9:55am.
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