Mixed Reaction to Data. Range Remains Intact
Tue, Jul 18 2023, 4:33 PM
Mixed Reaction to Data. Range Remains Intact
European bonds set the tone in the overnight session after a normally hawkish ECB member made dovish comments on the near term rate hike/pause outlook. German Bunds rallied a full 10bps peak to trough while US 10s barely managed 5bps over the same time frame. The AM econ data in the US created some 2-way volatility as the Retail Sales headline was at odds with internals, but bonds were already having second thoughts as evidenced by a clear run-in with resistance at 3.75% overnight. Yields were sideways and choppy until Europe closed for the day. After that, there was a modest drift toward–but not into–weaker territory. All in all an uneventful day that is perfectly in line with the broader sideways baseline expected between last week’s rally and next week’s Fed announcement.
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- Retail Sales
- 0.2 vs 0.5 f’cast, 0.3 prev
- NAHB Builder Confidence
- 56 vs 56 f’cast, 55 prev
- Industrial Production
- -0.5 vs 0.0 f’cast, -0.5 prev
- Retail Sales
08:30 AM
Nice gains overnight with Europe. 10yr down 6.7bps at 3.742 and holding after data. MBS up 6 ticks (.19)
10:38 AM
Quick selling as traders reconsidered data, but recovering now. MBS at highs, up over a quarter point. 10yr down 5bps at 3.758.
12:41 PM
Weakest levels of the day at EU closes. 10yr still down 3.2bps at 3.777. MBDS up only 2 ticks (0.06).
04:31 PM
Leveling off a bit now after hitting weaker levels just after 3pm. 10yr yields down 2.8bps at 3.781. MBS currently unchanged after being down 2-3 ticks (0.06-0.06)
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Source: mortgagenewsdaily.com