This morning's Retail Sales report definitely didn't help make the case for a bond market rally.  It's not that it beat expectations by much (only .3 vs .2 forecast), but there were few, if any weak points, and the previous month's core reading was revised up to 0.0 from -0.2.  Both before and after that data, Treasuries and MBS were drifting into weaker territory.  The only hint of the eventual reversal was the strong bounces at key support levels.  This suggested buyers were waiting for cheap enough entry points.

After waiting out the rest of the morning's data and the European stock market close, those buyers showed their hands.  The first wave of buying came at 10am.  It actually began as early as 9:55am after the Consumer Sentiment data.  That's counterintuitive because sentiment was higher than expected, but the buzz focused on the inflation expectations, which plunged to 4-year lows.

That initial leg of the rally got bonds back to breakeven levels on the day, but no further.  The next leg happened right after 11:30am when EU stock markets closed, taking bonds back into positive territory on the day. 


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 3.0
99-31 : +0-04
FNMA 3.5
103-12 : +0-03
FNMA 4.0
106-06 : +0-03
Treasuries
2 YR
0.5160 : -0.0030
10 YR
2.3310 : -0.0140
30 YR
3.0540 : -0.0190
Pricing as of 11/14/14 12:26PMEST

Morning Reprice Alerts and Updates
A recap of Alerts and Updates provided to MBS Live subscribers.
9:04AM  :  Bond Markets Take a Hit at First on Stronger Retail Sales, But There's Hope

Live Chat Featured Comments
A recap of featured comments from the Live Discussion on the MBS Live Dashboard.
Matthew Graham  :  "RTRS- BULLARD SAYS GLOBAL MARKET RECESSION FEARS FROM WEAKER EUROPEAN ECONOMY WERE OVERSTATED"
Matthew Graham  :  "RTRS- BULLARD SAYS LOWER LONG TERM RATES AND LOWER OIL PRICES SHOULD PROVIDE TAILWINDS FOR US ECONOMIC PERFORMANCE"
Matthew Graham  :  "RTRS- FED'S BULLARD SAYS LOW INFLATION RATE DOESN'T JUSTIFY KEEPING INTEREST RATES NEAR ZERO"
John Tassios  :  "if deflation expectations are there. it prevents growth and spending, with consumers and biz holding off to wait for lower prices, it becomes a viscous circle"
Matthew Graham  :  "RTRS- US OCT RETAIL SALES EX-AUTOS/GAS/BUILDING MATERIALS/FOOD SERVICES +0.5 PCT (CONS +0.4 PCT) VS SEPT UNCHANGED (PREV -0.2 PCT)"
Matthew Graham  :  "RTRS - US OCT RETAIL SALES +0.3 PCT (CONSENSUS +0.2 PCT) VS SEPT -0.3 PCT (PREV -0.3 PCT)"