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Bonds Rally on Month-End Trading and Friendly Inflation Data
Bonds began the day in unchanged territory and made cautious gains after reasonably friendly inflation data. PCE was a bigger factor than the Consumer Sentiment inflation expectations, but both contributed. Given our position on the calendar, we should also consider the impact of month/quarter-end positioning. It would help account for some of this week's resilience in US bond markets relative to the suggestion of equities markets or EU bonds.
Econ Data / Events
Core PCE Inflation y/y
4.6 vs 4.7 f'cast, 4.7 prev
43.8 vs 43.4 f'cast, 43.6 prev
62.0 vs 63.2 f'cast, 63.4 prev
1yr inflation expectations
3.6 vs 3.8 prev
5yr inflation expectations
2.9 vs 2.8 prev
Market Movement Recap
09:31 AM Roughly unchanged overnight. Moderately stronger after inflation data. 10yr down 3bps at 3.517. MBS up 2 ticks (.06).
01:10 PM Slow, steady gains all day. Some month-end bond buying is likely contributing. MBS up more than an eighth. 10yr down 4bps at 3.507
03:20 PM Additional gains before and after the 3pm CME close. 10yr down 6bps at 3.486. MBS up a quarter point.