Because CPI came out slightly higher today and because of its status as a bigger potential market mover, many rate watchers will assume that's the reason 10yr yields closed at their highest level since last July. But bond yields were actually lower in the first 40 minutes post-CPI. It wasn't until newswires cited Trump saying he's in no hurry to end the war that yields began spiking (and stocks began selling). It's also worth noting that yields were already up to 4.44% ahead of CPI and only moved 2bps higher by the close (i.e. not much intraday movement in the grand scheme). Could CPI have been a factor for some traders? Sure, but the majority of post-CPI volume suggests the data was largely taken in stride.
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- m/m CORE CPI (Apr)
- 0.4% vs 0.3% f'cast, 0.2% prev
- m/m Headline CPI (Apr)
- 0.6% vs 0.6% f'cast, 0.9% prev
- y/y CORE CPI (Apr)
- 2.8% vs 2.7% f'cast, 2.6% prev
- y/y Headline CPI (Apr)
- 3.8% vs 3.7% f'cast, 3.3% prev
- m/m CORE CPI (Apr)
No major reaction to CPI. 10yr up 2.9bps at 4.438 and MBS are down only 2 ticks (.06).
MBS down 5 ticks (.16) and 10yr up 4.2bps at 4.451
Weakest levels. MBS down a quarter point and 10yr up 5.2bps at 4.461
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