Bond Markets Holding Ground at Slightly Weaker Levels After Data
There hasn't been a decisive move in MBS or Treasuries yet, following the 830am economic data. If you had to assign a label, it's probably "sideways" for now. The only downside is that bonds were slightly weaker overnight, confirming yesterday's late weakness in MBS.
The losses haven't been extreme with Fannie 4.0s down only 2 ticks on the day. 10yr yields are up 1.6b3 ps at 2.655--under the 2.663 highs from earlier this morning.
The economic data was a mixed bag with inflation being slightly hotter than forecast and the NY Fed Manufacturing numbers being weaker.
- +0.2 vs +0.1 forecast
- Core CPI (excludes food and energy) +0.2 vs +0.1 forecast
- Year over year Core CPI +1.7 vs +1.6 forecast
Markets looked like they might have been reacting to the traction in inflation data right at 8:30am, but perhaps the lackluster manufacturing data helped balance the outlook.
Empire State Manufacturing
- +1.29 in April vs +8.0 forecast, +5.61 in March
- Employment Index +8.16 vs +5.88 in March
- 6-Month Outlook +38.23 vs +33.21 in March
The next data this morning will be the NAHB Housing Market Index at 10am.