Rate Ceiling Considerations Ahead of Inflation Data
Rates/bonds were under pressure ahead of today's 7yr Treasury auction and managed to recover afterward. The auction stats were quite strong, but that was largely a factor of the weakness in advance (i.e. bond prices fell in the AM, which made them more attractive in the PM). By the end of the day, both MBS and Treasuries made it back to unchanged levels or slightly stronger. The gains came despite a near-2% improvement in stocks.
Fed MBS Buying 10am, 11:30am, 1pm
GDP .........................-1.5 vs -1.3 f'cast, -1.4 prev
Consumer Spending... +3.1 vs +2.7 prev
Jobless Claims........... 210k vs 215k f'cast, 218k prev
Mixed overnight. Choppy consolidation around unchanged levels in the AM hours. Stocks up almost 1% but bonds holding unchanged to a hair stronger for the most part.
Mystery pop in yields just before 11am. 10yr now up 2.9bps at 2.779 and 4.0 UMBS down 3 ticks (0.09) at 100-09 (100.28).
Recovering after strong 7yr auction. Yields now back in line with pre-auction levels despite 2% gains in stocks.