European bonds set the tone in the overnight session after a normally hawkish ECB member made dovish comments on the near term rate hike/pause outlook. German Bunds rallied a full 10bps peak to trough while US 10s barely managed 5bps over the same time frame. The AM econ data in the US created some 2-way volatility as the Retail Sales headline was at odds with internals, but bonds were already having second thoughts as evidenced by a clear run-in with resistance at 3.75% overnight. Yields were sideways and choppy until Europe closed for the day. After that, there was a modest drift toward--but not into--weaker territory. All in all an uneventful day that is perfectly in line with the broader sideways baseline expected between last week's rally and next week's Fed announcement.
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- Retail Sales
- 0.2 vs 0.5 f'cast, 0.3 prev
- NAHB Builder Confidence
- 56 vs 56 f'cast, 55 prev
- Industrial Production
- -0.5 vs 0.0 f'cast, -0.5 prev
- Retail Sales
Nice gains overnight with Europe. 10yr down 6.7bps at 3.742 and holding after data. MBS up 6 ticks (.19)
Quick selling as traders reconsidered data, but recovering now. MBS at highs, up over a quarter point. 10yr down 5bps at 3.758.
Weakest levels of the day at EU closes. 10yr still down 3.2bps at 3.777. MBDS up only 2 ticks (0.06).
Leveling off a bit now after hitting weaker levels just after 3pm. 10yr yields down 2.8bps at 3.781. MBS currently unchanged after being down 2-3 ticks (0.06-0.06)
MBS Market Alerts
