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Bond Markets Pull Back After Stronger Durable Goods Data
Posted to: Micro News
Thursday, February 27, 2014 8:44 AM

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The overnight session was reasonably kind to Bond markets as Treasuries were flat during Asian hours and followed core European debt nicely into stronger territory.  The net effect was an overnight low of 2.6352 just minutes before the start of the domestic session.

Since then, 10yr yields are already up to 2.658 and Fannie 4.0 MBS are 4 ticks off their highs after stronger-than-expected Durable Goods data.  The inherent risk in all the recent "weather-blaming" is that moderately stronger data stands out, because according to the weather theorists, it shouldn't be happening.

As such, the strength in Durable Goods is currently trumping the weakness in the Jobless Claims data out at the same time.  Here are break downs of both:

Jobless Claims

  • 348k vs 335k forecast
  • 4-week average unchanged at 338,250
  • Continued Claims 2.964 mln vs 2.985 mln forecast
  • Our take on share of market movement: 3.5/ 10 
  • While markets are moving away from this data's suggestion, it's probably keeping them from doing so at a more pronounced pace.

Durable Goods

  • Durable Goods for January -1.0 vs -1.5 forecast
  • December revised to -5.3 vs -4.2 forecast
  • Excluding transportation +1.1 vs -0.3 forecast
  • Our take on share of market movement: 6.5/10
  • We're increasingly seeing data that makes December look worse and January look like a bounce back.  That may actually be a longer term positive for bond markets (because some of January's strength could be to make up for repressed activity in December).  But for today, a 'beat' on an upper 2nd tier market-mover is--well... moving markets.

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