Until this morning, recent momentum in bond markets was clearly and cleanly pointing to a correction within the recent range, where rates would move higher after spending a good amount of time prodding 2014 lows. In the course of that prodding, while MBS managed to hit new highs, broader "bond markets" (as represented by 10yr yields) merely revisited February's lows. This was a fairly bearish eventuality, and one that coincided with most technical indicators shifting toward higher rates.
That "writing on the wall"--as clear as it may have been--was met with the fiercely brandished eraser of a very weak Retail Sales report this morning. In and of itself, the data isn't able to completely erase the writing on the wall. So it simply makes it harder to read.
In other words, whereas the move higher within the range was looking quite likely and uneventful, today we're forced to consider whether or not it's on hold, and for how long, or if it might be reversing. For all intents and purposes it sets us back a few days, when it wasn't yet crystal clear that momentum was leading toward higher rates. Keep in mind though, it's very easy for markets to trade as-expected in the face of a big deviation in economic data. It's far more telling to see where things go in the absence of significant data. Tomorrow will do a better job in that regard.
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