Traders Hit Snooze Button, With Next Alarm Set For Fed Day

Nothing really happened in the bond market today and there wasn't much to discuss (one of the reasons for focusing on MBS spreads in the AM commentary). Consumer Sentiment gave the impression that it helped bonds, but it was just in right place at almost the right time (10 minutes too early to get credit).  The day ended up being super sideways despite early volatility.  Looking back to Tuesday, we see traders basically hit the snooze button after the massive post-CPI sell-off, and set their next alarm for next Wednesday's Fed announcement.  Sure, we saw some range-bound volatility at times, but this was nothing more than a bit of tossing and turning that often precedes sounder sleep.

Econ Data / Events
    • Consumer Sentiment
      • 59.5 vs 60.0 f'cast, 58.2 prev
    • 1yr inflation outlook
      • 4.6 vs 4.8 prev
    • 5yr inflation outlook 
      • 2.8 vs 2.9 prev
Market Movement Recap
09:01 AM

MBS are down 3/8ths on the day, but at least half of that is due to illiquidity. 10yr yields are up 3.5bps at 3.484 after being at lows of 3.433 earlier this morning.

10:20 AM

Nice bounce back, both due to bonds rallying and to improved liquidity in MBS.  4.5 coupons nearly unchanged now and 10yr yields down 1.5bps at 3.434.

12:42 PM

Bounce back bounced back a bit.  MBS down an eighth and 10yr back up by almost 1bp to 3.457.

05:05 PM

Out the door at almost perfectly unchanged levels.  Total snooze-fest in retrospect. 

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