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Higher Inflation Expectations Keep Yields Range-Bound
It's not as if bond yields stood any real chance of breaking outside the week's prevailing range based on today's starting point, but by losing a modest amount of ground, they ended up staying even closer to the 4.50% psychological level ahead of next week's big CPI revelation. Today's driver was the Consumer Sentiment data. While the headline was weak (which would be good for bonds, all other things being equal), the inflation expectation component got the market's attention, pushing yields higher and stocks lower after 10am. The selling was brief and the afternoon was on cruise control at modestly weaker levels.
Econ Data / Events
Consumer Sentiment
67.4 vs 76.0 f'cast, 77.2 prev
1yr inflation expectations
3.5 vs 3.2 prev
5yr inflation expectations
3.1 vs 3.0 prev
Market Movement Recap
10:24 AM Moderately weaker overnight and no help from sentiment data. MBS down 5 ticks (.16) and 10yr up 4.1bps at 4.497
11:25 AM A bit of additional weakness as MBS get caught up with TSY losses. 10yr still up just over 4bps at 4.498, but MBS now down 7 ticks (.23).
03:44 PM Losses cooled down by 1pm. Sideways and stable since then. MBS down 6 ticks (.19) and 10yr up 4.7bps at 4.503
MBS Commentary
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Higher Inflation Expectations Keep Yields Range-Bound
It's not as if bond yields stood any real chance of breaking outside the week's prevailing range based on today's starting point, but by losing a modest a... (read more)
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Mortgage Rate Watch
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In general, you should be skeptical any time someone says a future week will be more volatile. There's really no way to know such things in advance, but this time is an exception. While we can't have any idea which direction rates will move n... (read more)
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Rob Chrisman
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On a flight yesterday I had a choice of movies and, knowing nothing about it, chose “The Beekeeper,” filled with severed fingers and broken glass being shoved into jugular veins. Fortunately, I followed it with “Boys in the Boat” (predictable but wel... (read more)
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