Bond Markets Much Stronger after GDP, Durables
Treasuries had a moderately stronger overnight session, but hit 8am just slightly lower in yield. MBS also opened in modestly stronger territory and, along with Treasuries, waited for 830am data for any bigger moves.
8:30am data was friendly...
- GDP -2.9 vs -1.7 forecast
- largest drop since Q1 2009
- Final Sales -1.3 vs 0.0 forecast
- Consumer Spending +1.0 vs +3.1 previously, biggest drop since Q4 2009
- Business Inventory change accounts for -1.7 of total GDP
Durable Goods helped too
- May Durable Goods -1.0 vs 0.0 forecast
- Excluding Defense spending +0.6 vs +0.8 forecast
Fannie 3.5s shot a quick quarter point higher to 102-25 and have since dialed back to 102-22. 10yr yields dropped abruptly to 2.529 and are now back up to 2.538. Even then, considering the range boundary is 2.57, this raises the distinct possibility that we could confirm a range breakout when pit trading closes at 3pm.
There's no other significant data this morning, but the 5yr Treasury Auction hits at 1pm.