Today was another nice, simple day for bond markets. Yields entered the domestic session slightly lower, thanks to weak data overseas. Even then, we were very much in the thick of the recent range.
There was always a decent enough chance that a big beat/miss in Retail Sales data would move markets, but ended up getting just a bit more economic data weakness than a "big miss" normally implies.
If we look solely at Retail Sales, it wasn't abysmally low, coming in at 0.0 vs expectations for a 0.4 percent increase. But that's certainly low enough to get bonds moving in the right direction.
Then there was Producer Price data. Core PPI fell -0.3 percent month-over-month vs forecasts calling for a 0.2 percent gain. Year-over-year, the index stood at +0.7 vs a median forecast of +1.2 and a previous reading of +1.3. That's a big chunk of inflation that's suddenly gone missing, and it certainly added to the bull case for bonds.
Yields immediately moved to the lower end of the range. In fact, at 1.48% in 10yr Treasuries, we could consider that to be the outer limits of the recent range, as 1.50-1.52 have gotten more action as a "floor." Incidentally, yields rose into the afternoon and did indeed go out the door just over 1.51.
Despite a bit of a give-back into the afternoon, bonds had a great day nonetheless. Rate sheets were the best in a month and there were only a few negative reprices from the lenders with the perennially itchy trigger fingers.