Wednesday’s CPI data resembled a passionate political speaker campaigning for the country to go to war on low interest rates. Yesterday’s 30-year bond auction started with a “not-so-fast” counterpoint, and today’s retail data gives us hope that cooler heads will prevail. Bottom line: As of this morning, midweek drama seems to have given way to the same old trading range that has been intact since April 7th.

Econ data / events

  • Fed MBS purchase 10 a.m., 11:30 a.m., 1 p.m.

  • Retail sales 0.0 vs 1.0 f’cast, 10.7 prev

  • Consumer sentiment 82.8 vs 90.4 f’cast, 88.3 prev
    Inflation expectations
    (1y) 4.6 vs 3.4 prev
    (5y) 3.1 vs 2.7 prev

Market Movement Review

8:52 am

Apartment in Asia. Modestly stronger in Europe and now flat (at a slightly stronger level) by retail sales. 10 year return by 2.2 basis points and MBS by almost an eighth.

2:02 pm

Extremely slow and mostly sideways. Bonds are not at their best but are still in stronger territory on the day. 10 year yields are 1.7 basis points lower at 1.642 and MBS are 1-2 ticks (0.03-0.06) higher.

3:58 pm

Modest gains over the past hour or two, with yields returning to their prime (10’s currently falling 2.7 basis points to 1.632). MBS aren’t quite as close to their morning highs but have improved a bit since the last update with 2.5 coupons, an eighth a day at 103-14 (103.54).