Bond markets had an exceptionally narrow, quiet overnight session with 10yr yields holding inside a 1.7bp range and hitting 8am almost perfectly in line with yesterday's latest levels. MBS also opened unchanged and, along with Treasuries, improved slightly ahead of the morning's data.
Stronger-than-expected Empire State Manufacturing and Producer Price data led to abrupt but contained losses at 8:30am. Empire State is particularly important as the big improvement in New Orders and Employment are some of the first pieces of January data that suggest the super low December Payrolls number (that came out on Jan 10th) may end up being an outlier.
10yr yields shot up from 2.86 to 2.91 and currently sit at 2.90. Fannie 4.0 MBS moved from 103-23 to 103-14 and are currently at 103-16.
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