Have you heard the one about the Turkish debt crisis?  Things are pretty bad for Turkey and the currency is indeed in freefall, but until the charts do something different, they're not yet making a compelling case for a "risk-off" connection to the US bond market.  Rather, today's action was centered on this morning's Producer Price Index (PPI).

PPI isn't typically a big market mover, but the stakes are a bit higher at the moment.  Reason being: tomorrow brings the more important CPI data (consumer price index).  The most widely-followed part of the CPI data--"core" year-over-year--has poked and prodded a ceiling of 2.3% during the recovery from the Great Recession, but it has yet to break through.  With last month's reading right on the 2.3% line, a downturn in tomorrow's data would serve as a fresh sign that inflation remains contained, benign, or simply less threatening than some investors may have assumed based on the increases seen so far in 2018.

In short, today's gains were most readily ascribed to PPI's suggestion about tomorrow's CPI.  Bond yields fell early and then didn't do much for the rest of the day.  10yr yields hit the 3pm close down 2.6bps  at 2.936%.  Fannie 4.0 MBS gained 3/32nds (0.09), landing on 101-24 (101.75) at the same time.


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 4.0
101-24 : +0-03
Treasuries
10 YR
2.9294 : -0.0366
Pricing as of 8/9/18 4:39PMEST

Today's Reprice Alerts and Updates
A recap of Alerts and Updates provided to MBS Live subscribers.
1:23PM  :  30yr Auction: Right Down The Middle
9:09AM  :  Bonds Rally on Producer Price Miss

MBS Live Chat Highlights
A recap of featured comments from the Live Discussion on the MBS Live Dashboard.
Hugh W. Page  :  "ding ding ding ding"
Timothy Baron  :  "interest payments?"
Hugh W. Page  :  "Question of the day: What is the fastest growing part of Government Spending right now?"
Matthew Graham  :  "I'm not sure I've seen an auction more "on the screws" than that. Straight "B""
Matthew Graham  :  "RTRS - U.S. SELLS $18 BLN 30-YEAR BONDS AT HIGH YIELD 3.090 PCT, AWARDS 57.33 PCT OF BIDS AT HIGH"
Matthew Graham  :  "RTRS - U.S. ECONOMY SEEN GROWING AT 4.3 PCT IN Q3 VS 4.4 PCT ESTIMATE ON AUG 3 - ATLANTA FED'S GDPNOW MODEL"

Economic Calendar
Time Event Period Actual Forecast Prior
Thursday, Aug 09
8:30 Core Producer Prices YY (%)* Jul +2.7 2.8 2.8
8:30 Producer Prices (%) Jul 0.0 0.2 0.3
8:30 Core Producer Prices MM (%)* Jul +0.1 0.2 0.3
8:30 Jobless Claims (k) w/e 213 220 218
13:00 30-Yr Bond Auction (bl)* 18
Friday, Aug 10
8:30 Core CPI Year/Year (%)* Jul 2.3 2.3
8:30 CPI mm, sa (%)* Jul 0.2 0.1