- MBA Applications up following decrease in rates.
- June CPI
- Headline CPI = +0.7% (consensus = +0.6%)
- CORE CPI (excludes food/energy) = +0.2% (consensus = +0.1%)
- Year over year still down 1.4%
- Year over year consensus right on the money with actual year over year core = +1.7%
- Largest rise in Gasoline since Sept 2005
- Interesting Dichotomy - This is the largest monthly rise for headline CPI since July 2008, but the largest year over year DROP since 1950!!!
The initial reaction in bond markets was negative upon seeing a slightly worse than expected reading, but then logic seemed to enter the scene as traders realized the year over year CPI consensus was on the screws. So initial losses have moderated and lines have been drawn in the sand for both MBS (99-20 and tsys 3.52 in the 10yr).
More data hits at 9:15AM in the form of industrial production. Though not an A-list celeb in terms of scheduled data, this could create a shift in momentum given a somewhat equivocal suggestion from the AM's existing data (Empire St came out as well just slightly worse than expected). Then this afternoon, in what could either do absolutely nothing, or be the biggest market mover of the day, we'll get the psychology report from the Fed as the minutes from the most recent FOMC meeting are released.
2s vs. 5s: 143bps
2s vs. 10s: 255bps
5s vs. 10s: 113bps
EUR/USD: 1.4091
USD/JPY: 93.44
NYMEX CRUDE: $60.96
S&P Futures: +10.90 @ 912.30
Interest Rate Option Volatility= HIGHER AGAIN (185bps)
MBS Market Alerts
