But not quite as bad as treasuries which are down twice as much as MBS.  Currently, we're down 11/32nds in the 5.5, which should be good for .375 worsening to cost this morning.


In a nutshell, It was the 8:30AM economic releases that spooked the bond market.  Check this out:


That's a drop from 100-10 at 8:30 to 99-30 at 8:35.  Ouch!

Here's the relevant news:

  1. Import prices rose 1.8%, but a scant 1.1% excluding petroleum.  This was .1% higher than analysts' expectations.  Even though slightly higher than expected, this reading is obviously causing traders some concern over inflation.  It is certainly part of the one-two punch that knocked bonds down this morning. 
  2. Retail sales were down .2% overall which was .1% worse than expectations, BUT factoring out volatile auto sales, there was actually a .5% improvement.    The expectation of that reading was plus .3%.  So this was not good news for the bond market.  

Normally, we'd expect to see strong stocks on news like this, but other sectors are dragging the market down.  So we have that "special" kind of day where stocks, treasuries, and MBS are ALL losers.

Does the rest of the news matter?  Not really.  At least MBS pricing hasn't thought so.  But in case you need to look smart at your next cocktail party:

  1. More of the same shtick from Big Ben.   Markets under stress, fed taking steps to help, and then I fell asleep, sorry.
  2. Business inventories rose .1% in March, much much lower than expectations of .5%, but no one seemed to care as sales hit expectations.
  3. ICSC and the Redbook report both showed slight improvements in year over year sales, but again, no one cared because the retail sales report is 47 times more important.
So there you have it folks!  If you are not locked yet, stay that way until further notice.  We may yet gain some ground today.  The rest of the week has more data to come so the tougher decision will be whether to lock or float into tomorrow's CPI report.  More on that this afternoon...