1 Step Back and 1 Step Forward So Far This Week

Bonds made solid gains overnight, largely following a rally in Europe (chalked up to lower wholesale inflation in Germany, among other things).  Domestically, wholesale inflation (via PPI) also got credit for pushing yields to their lowest levels of the day, but that only lasted a moment before bonds retreated back toward opening levels.  Even after mid-day news headline drama (Russian missiles accidentally hitting Poland... later revealed to be a false alarm), yields hit the 3pm close almost perfectly in line with opening levels.  The moderate gains offset yesterday's moderate weakness to keep trading levels right in line with last Thursday's lowest yields.

Econ Data / Events
    • Headline PPI
      • m/m 0.25 v 0.4 f'cast 0.2 prev
        • last month revised down from 0.4
    • CORE PPI
      • m/m 0.0 v 0.36 f'cast 0.2 prev
        • last month revised down from 0.3
      • y/y 6.7 vs 7.2 f'cast, 7.1 prev
    • NY Fed Manufacturing
      • 4.5 vs -.5 f'cast, -9.0 prev
Market Movement Recap
08:39 AM

Weaker wholesale inflation in Germany and weaker jobs data in the UK helped bonds overnight.  A big miss in US PPI extended the rally at 830am.  10yr down 7.5 to 3.786.  MBS up 5/8ths of a point.

09:35 AM

Giving up the post PPI gains.  10yr down only 4bps at 3.822.  MBS up only 3/8ths of a point.

01:15 PM

Generally weaker into the PM hours.  Treasuries at the high yields of the day, down only 2bps now at 3.84.  MBS are still up 6 ticks (.19), but down roughly 3/8ths of a point from the highs.

02:01 PM

Recovering a bit after headlines regarding Russian missiles accidentally landing in Poland.  10yr down 6.4bps at 3.799.  MBS back up 3/8ths on the day.

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