The day began with MBS and Treasuries in weaker territory after an uneventful overnight session. There wasn't much to the weakness and it only made for a few bps higher in 10's and 3-5 ticks lower in MBS.
From there, geopolitical risk headlines surrounding Russia helped fuel a Treasury bid and stock selling. The fact that these hit just before the stock market open made for an even quicker move. 10's rocketed from 2.72 to 2.68 in short order and MBS surged well into positive territory.
Finally, a much-stronger-than-expected New Home Sales release put an end to the bull run in bonds. There can be a lot of debate about the standard error on this report, but keep in mind that New Home Sales have seen the least bounce back compared to all the other main housing metrics. In that sense, big beats like this merely serve to close some of that gap.
Additionally, the data showed the biggest gains in the Northeast, which was the same conclusion from the recent New Residential Construction report. Can these big misses/beats be substantially revised? Of course, but it's never as much as the standard error suggests, and last month was revised higher (to 427k from 414k). Point being: a big standard error in the report isn't automatic justification to disregard the numbers as frivolous. It might make you feel better about markets moving against you, but ultimately if trading levels imply markets aren't disregarding the data, that's all that matters.
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