MBS Holding Near Unchanged Despite Slightly Weaker Treasuries Overnight
Domestic bond markets were inconsequentially weaker in the overnight session. US Treasuries notably held off on following a modest rally in core European bond markets, which could be an indication that we've reached the limits of our organic month/quarter-end demand. It can still come from other places if that's the case, but would have to be motivated by something like an exceptionally weak reading on Consumer Sentiment at 9:55am.
The 8:30am data--Incomes and Outlays--didn't cut it as a market mover. It never usually does, but today's release was particularly close to consensus.
Incomes and Outlays
- Personal Income +0.3 vs +0.2 forecast
- Spending +0.3 vs +0.3 forecast
- Core PCE Price Index +0.1 vs +0.1 forecast
This hasn't resulted in any market movement, but MBS had just climbed into unchanged territory ahead of the release. Since then, they've barely budged but are 2 ticks up on the day at 104-07.
Meanwhile, 10yr yields are weaker to the tune of 1.6bps. There's no apparent motivation for MBS outperformance other than their underperformance yesterday.