Insult to Injury But Still Waiting on Next Week's Fed
Mixed messages in the morning's PCE inflation data send bonds skidding to worst levels of the week before 10am. Stability followed. It was eerily quiet at times--at least until the 3pm CME close. Shortly after that, buyers left the building in droves. Certain sellers pounced via programmatic trades after the 10yr logged its biggest monthly loss since 2009 and its biggest 2-month loss since 1984. Nothing about the afternoon's sell-off has any implication for the road ahead though. The best info we'll get on that front will come from next week's Fed announcement. Watch today's video for additional thoughts on how the Fed fits into the big picture outlook.
Fed MBS Buying 10am, 11:30am, 1pm
PCE Price Index (m/m).....0.9 vs 0.5 previously
PCE Price Index (y/y).......6.6 vs 6.3 prev
Core PCE (m/m)..............0.3 vs 0.3 f'cast, 0.3 prev
Core PCE (y/y)................5.2 vs 5.3 f'cast 5.3 prev
Employment Cost Index ...1.4 vs 1.1 f'cast, 1.0 prev
Chicago PMI............... 56.4 vs 62.0 f'cast, 62.9 prev
Consumer Sentiment ...65.2 vs 65.7 f'cast/prev
1 and 5 year inflation....unchanged
Modestly weaker overnight with additional selling after PCE data. 10yr up 5+ bps to 2.883. UMBS 4.0 coupons down just over 3/8ths of a point.
Decent recover at the 9:30am NYSE open, but now giving up those gains (and nearly back to the weakest levels). 10s are up 7.4 bps at 2.906 and 4.0 UMBS are down just under half a point.