Bond markets ultimately rallied modestly following today's much-anticipated CPI data.  This is a departure from recent norms as the last 3 reports have generated some of the biggest reactions in each of the past 3 months.  Still, the result is understandable given the lack of change in annual core inflation.  For the 3rd straight month, it came in at 1.7%.  Bond bulls like it because it's still low.  Bond bears like it because it's not moving lower.  Trading ensued accordingly, with multiple lead changes before things finally settled down.

At their best levels, 10yr yields were as low as 2.182.  At their highs, they were 2.222--a fairly narrow range given the nature of today's data.  

Fannie 3.5 MBS ended the day up 3/32nds at 103-10.  Note: the 2-day chart on MBS Live shows today's prices lower than yesterday's.  This is due to the monthly settlement process that took place in Fannie and Freddie 30yr fixed MBS yesterday (aka, "the roll").  Push MBS delivery back a month and you push a payment back a month.  That makes the trailing month a bit cheaper to buy than the month in front of it.  The old front month (August) was retired yesterday and appears on the left side of the chart.  The new front month (September) was always trading a bit lower than August.  Were we to compare September vs September prices, we would not see the same visual drop in prices on the chart.


MBS Pricing Snapshot
Pricing shown below is delayed, please note the timestamp at the bottom. Real time pricing is available via MBS Live.
MBS
FNMA 3.5
103-10 : +0-03
Treasuries
10 YR
2.1905 : -0.0205
Pricing as of 8/11/17 5:58PMEST

Today's Reprice Alerts and Updates
A recap of Alerts and Updates provided to MBS Live subscribers.
9:16AM  :  Gains Erased; Geopolitical Headlines Not Helping
8:39AM  :  CPI Barely Weaker; Bonds Barely Rallying

MBS Live Chat Highlights
A recap of featured comments from the Live Discussion on the MBS Live Dashboard.
Matthew Graham  :  "where "just now" = past few years"
Matthew Graham  :  "to dumb that down a bit: Fed policy can't control what it's supposed to--at least not very well. And we're just now seeing solid evidence of that."
Matthew Graham  :  "DK, I can't answer that. I can ask it again though: do we? What's the upside and downside? If it's gradually becoming a smaller part of the GDP, does it matter? Is it hurting us? More importantly, can that pain be quantified and traced to the source? Biggest issues have been and will continue to be fiscal and societal when it comes to the Fed's objectives. That we expect the Fed to be able to have any sort of reliable control over their mandates is a bit silly. I think we're living in a moment in economic history where policymakers are realizing that for the first time in any sort of irrefutable way."
Gavin Luckman  :  "Never Ending Story"
Matthew Graham  :  "you've got to fight against the sadness, that's why. I mean, fight against the quagmire of meaningless Fed semantics. Monetary policy has been a guessing game for a while now."
Timothy Baron  :  "Why did you make me google Artax? Jeez..."
John Paul Mulchay  :  "Actually a bit here on that http://www.cnbc.com/id/104645887?__source=mnd|news|&par=mnd"
Daniel A. Kramer  :  "as a citizen of US, don't we want the Fed to unwind the massive balance sheet?"
John Tassios  :  "CS is correct. No one knows how much MBS spreads will increase once QT begins."
Christopher Stevens  :  "inflation and potential timing of rate increase(s) is not as important as wind down policy/timing imo"
Matthew Graham  :  "RTRS- FED'S KASHKARI: WEAK CPI INFLATION DATA ANOTHER REASON TO HOLD OFF RATE HIKES"