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Bond Markets Stronger After Retail Sales, German Central Bank News
Posted to: Micro News
Tuesday, May 13, 2014 8:51 AM

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Treasuries began their overnight trading adventures in very non-adventurous form.  10yr yields moved sideways through Asian trading hours and didn't budge until news that the German central bank (Bundesbank or "BUBA") is open to significant stimulus crossed the wires.  This synergizes with last week's assertion from Mario Draghi that the European Central Bank will be taking new, stimulative action at the next meeting.

Treasuries improved with German Bunds (10yr German government debt--a benchmark for "EU bond markets"), but Bunds got most of the benefit.  The tables turned after this morning's Retail Sales data came out much worse than expected.  Here's a run-down:

  • Retail Sales (April) +0.1 vs +0.4 forecast
  • March revised up to +1.5 from +1.2
  • Excluding Autos 0.0 vs +0.6 forecast
  • March revised up to +1.0 from +0.7
  • Excluding Autos/Gasoline -0.1 vs +1.4 in March

Retail Sales data has been an on-again off-again market mover recently, but this is a big enough deviation from the consensus to provide some clear guidance.  After hitting the domestic session fairly close to unchanged, Treasuries and MBS improved significantly.

10yr yields dropped from 2.66 to 2.63 and Fannie 3.5s rose 6/32nds to 101-25.

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Mortgage Rates:
  • 30 Yr FRM 3.67%
  • |
  • 15 Yr FRM 2.95%
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  • Jumbo 30 Year Fixed 3.62%
MBS Prices:
  • 30YR FNMA 4.5 108-28 (0-00)
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  • 30YR FNMA 5.0 110-17 (-0-04)
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  • 30YR FNMA 5.5 111-30 (0-02)
Recent Housing Data:
  • Mortgage Apps 10.03%
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  • Refinance Index 11.33%
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  • Purchase Index 8.43%