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Bond Markets Slightly Weaker After First Round of Data
Posted to: Micro News
Thursday, January 30, 2014 9:01 AM

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Apart from the fact that US Treasuries continue to demonstrate an unpleasant degree of correlation to silly things like the Turkish Lira, the overnight session was more 'normal' today, with 10yr yields holding a 3bp range that started out more narrow in Asia and grew slightly more volatile in Europe.  That's pretty standard fare. 

The bias was just slightly weaker and continues to be weaker into the domestic session, though we'll have to contort the data in order to blame it.  On the GDP front, we could say that  an "as-expected" reading of 3.2 percent is better than a "weaker-than-expected" reading, or perhaps that consumer spending rose at the best pace since late 2010, a decidedly less-than-enjoyable time for rates.

Jobless Claims requires even more of a stretch as the headline missed by a fair amount (348k vs 330k forecast), with the only saving grace being the drop in continued claims.  This had been a bit troublesome over the past two cycles, coming in over 3 million despite forecasts in the high 2's.  Now today with the forecast over 3 million, the result ends up being 2.991.  C'est la vie.

10yr yields are up just over a bp since the data and 3.8bps on the day.  Fannie 4.0s are down 5 ticks on the day with 3 of those since the data.  The next data hits at 10am with Pending Home Sales, which typically isn't as big of a market mover.  One thing to keep in mind though: the 8:30am data could have easily been traded in the other direction, so the weaker response reveals some inclination toward weakness in bond markets (as does the weaker overnight bias).  Stocks are rising at the moment as well--two small pieces of evidence suggesting we stay on guard.

GDP

  • +3.2 vs +3.2 forecast
  • Consumer Spending +3.3, most since Q4 2010
  • Home Investment -9.8, first decline since Q3 2010
  • Business Inventory change largest since Q1 1998, adds .42 pct to GDP
  • Our take on share of market movement: 5/10
  • Full Release

Jobless Claims

  • Claims 348k vs 330k forecast, 329k previously
  • Continued Claims 2.991 mln vs 3.020 forecast, 3.007 previously
  • Our take on share of market movement: 5/10 (higher headline is balanced somewhat by the drop in continued claims back below 3 mil)
  • Full Release



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