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Bond Markets Back to Unchanged after Industrial Production (Not Necessarily Because of it)
Posted to: Micro News
Friday, January 17, 2014 9:50 AM

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Here are the details on the Industrial Production report:

  • Industrial Output: +0.3 vs +0.3 forecast
  • Capacity Use Rate 79.2 vs 79.1 forecast
  • Full Report
  • Market movement thoughts: It looks like weakness lines up with this report, but it probably isn't nearly as correlated as it seems.  More to do with stock market open.

There's nothing too special about the data.  Additionally, the bigger move and bigger dose of selling volume in bond markets arrived at 9:19am.  If it was data-related, we would have seen it right at 9:15am.

The better bet is that the weakness is due to the combination of low volumes overall, technical resistance for both MBS and Treasuries, and money shuffling ahead of the equities open.  The low volume doesn't create weakness, but it does mean that if a big account or two is selling Treasuries for liquidity at the equities opening bell, those trades would have more of an effect on price levels (i.e. takes less $ to move markets in low volume).

Whatever the case may be, Consumer Sentiment in 6 minutes will have a chance to confirm this negative bounce or put an end to it.  That said, it could still be inconclusive if it comes in close to consensus.

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