Bond markets started the day little-changed from the previous session and having seen little volatility overnight. Although it wasn't destined to be too consequential, the Durable Goods data was at least interesting--setting a record for month-over-month improvement thanks to Boeing's 777 order glut. The internal components of the report that ignore aircraft were markedly weaker than expected, however.
Bond markets improved following the weak internals with both MBS and Treasuries hitting their best levels in over a week. The turning point came with the open of cash trading in stocks and was accelerated by the stronger-than-expected Consumer Confidence data. Unlike Durable Goods earlier this morning, the internal components of the confidence data were stable to strong. Notably, the key employment tracking metric of the report ("jobs hard to get") fell to it's lowest/best level since July 2008.
The losses haven't been severe. Fannie 3.5s have merely returned to hover around unchanged levels. That said, even unchanged levels are far enough from those seen during rate sheet print times to connote some small amount of negative reprice risk.
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