Paradoxical Data Reaction, But it Didn't Last

Yesterday we examined last week's paradoxical bond sell-off in response to inflation data that should have helped.  Today's paradoxical shoe was on the other foot.  Retail Sales crushed the consensus and although bonds sold off initially, they rallied back to stronger levels in short order.  Granted, that recovery didn't last, but by the time bonds hit weaker territory, the Retail Sales trade had long since passed.  The initial resilience may speak to some buying value buying demand from traders who think 10yr Treasuries yielding over 4.25% are worth owning.

Econ Data / Events
    • Retail Sales
      • 0.7 vs 0.4 f'cast, 0.3 prev
    • Empire State
      • -19 vs -1 f'cast, 1.1 prev
Market Movement Recap
09:00 AM

moderately weaker overnight with more selling after AM data.  MBS down 3/8ths and 10yr up 3.2bps at 4.233

11:24 AM

Decent bounce into 10am hour. leveling off since then.  10yr down .8bps at 4.193.  MBS down 1 tick (.03).

03:21 PM

Losses gradually mounting into PM hours.  10yr up 2bps at 4.221.  MBS down just over an eighth of a point.

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