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Bonds Rattled By Surprisingly Big Beat in Spending Data
Today's big surprise was the PCE price index component of Q1 GDP. GDP itself was weaker than expected, but even that was explained away by components not related to private domestic consumption. Focusing on the latter makes Q1 look just as strong as any of the past few quarters. PCE did the most damage for two reasons. It was MUCH higher than expected (3.7 vs 3.4) and that implies tomorrow's PCE data (a monthly version of today's quarterly report) is also at risk of coming in higher than expected. This "sneak peek" effect is only a concern once per quarter with the "advance" release of GDP.
Econ Data / Events
Jobless Claims
207k vs 214k f'cast, 212k prev
Continued Claims
1781k s 1814k f'cast
GDP
1.6 vs 2.5 f'cast, 3.4 prev
Q1 PCE Prices
3.7 vs 3.4 f'cast
Wholesale Inventories
-0.4 v s +0.2 f'cast
Market Movement Recap
08:41 AM Bonds losing ground quickly after 8:30am data. MBS down a quarter point. 10yr up almost 5bps at 4.691.
11:07 AM Weakest levels at 9:30am and pushing back slightly since then. 10yr up 6.4bps at 4.706. MBS down 10 ticks (.31).
01:28 PM No reaction to 7yr Treasury auction. 10yr up 6.1bps at 4.703. MBS down 11 ticks (.34)
03:35 PM Increasingly flat at the same old levels. 10yr up 6bps at 4.702 and MBS down 10 ticks (.31).
MBS Commentary
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Bonds Rattled By Surprisingly Big Beat in Spending Data
Today's big surprise was the PCE price index component of Q1 GDP. GDP itself was weaker than expected, but even that was explained away by compone... (read more)
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Mortgage Rate Watch
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Interest rates care about quite a few different things, but inflation and Fed policy are two of the biggest considerations. One of the Fed's favorite ways to track progress on inflation is the PCE price index which comes out every month, but al... (read more)
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Rob Chrisman
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I travel a little bit, so it was with great interest that I read, “The Department of Transportation… will soon require airlines to quickly refund passengers if they cancel, delay, or make significant changes to flights.” “A book hit my head, and I ha... (read more)
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