It's going to be a chart-focused commentary today, because frankly, there's not much to say with words.  The bottom line is that this morning's economic data has potentially initiated the bounce that we've been waiting and hoping for.  As with any single day of rally momentum in bond markets, we'd really need to see another day or two of similar behavior to confirm the bounce.  Moreover, things could still change by the end of the day, but to be sure, we're off to a good start.

2017-5-12 Open

Based on the chart above, today's potential bounce is just another potential shift in the series of normal ebbs and flows typically seen by bond markets.  In the bigger picture, however, it comes at a more interesting time.  We've made many comparisons between the late 2016 bond sell-off and that seen in mid-2013 following the taper tantrum.  If the similarities in the patterns continue to hold, we're now finding the same sort of support around the 100-day moving average that we found at this stage in early 2014.

2017-5-12 open2

A strong start next week would make this a lot more exciting, but if we can merely hold this morning's gains throughout the session, it's a strong opening argument in the case for a bounce.

MBS Pricing Snapshot
Pricing shown below is delayed, please note the timestamp at the bottom. Real time pricing is available via MBS Live.
FNMA 3.5
102-16 : +0-10
10 YR
2.3433 : -0.0567
Pricing as of 5/12/17 9:19AMEST

Tomorrow's Economic Calendar
Time Event Period Forecast Prior
Friday, May 12
8:30 Retail sales mm (%)* Apr 0.6 -0.2
8:30 Core CPI Year/Year (%)* Apr 2.0 2.0
8:30 CPI mm, sa (%)* Apr 0.2 -0.3
10:00 Business inventories mm (% ) Mar 0.1 0.3
10:00 Consumer Sentiment Prelim May 97.0 97.0