We don't often think much of GDP as a major consideration for the bond market, but today was a notable exception, partially because it was the first look at Q2's numbers, partially because it fuels a debate about recession labelling, and mostly because it was a big negative number hitting a market that was expecting a moderately positive number. Any way you slice it, GDP offered no objection to the recently gloomy shift in economic data. Taken together with Powell's allusions to a shift in the pace of rate hikes, it was enough to add emphasis to what were already strong levels in the bond market this week.
GDP -0.9 vs +0.5 f'cast, -1.6 prev
Jobless Claims 256k vs 253k f'cast, 261k prev
Bonds rallying to best levels in more than 3 months after big miss in GDP. 10yr briefly 2.658, but now down "only" 10.5bps to 2.679. MBS up half a point.
Pulling back a bit from AM gains. MBS still up 3/8ths to half a point, but down an eighth to a quarter since 11:30am.
Off the weakest levels in MBS and fairly sideways for the past hour. 4.0 coupons still up more than half a point. 4.5s are close. 10yr yields are still down 9bps on the day, but well off the 2.65 lows at 2.70 currently.