PPI Drives Decent Rally; But CPI Packs a Bigger Punch
1 Hour, 40 Min ago
This morning’s core m/m Producer Price Index hit 0.0% versus a median forecast of 0.2%. Unsurprisingly, the friendly inflation reading resulted in immediate but reasonably subdued gains for the bond market. It goes without saying that PPI will always be 2nd fiddle to CPI (the Consumer Price Index). With CPI looming tomorrow morning, it’s no surprise to see bonds avoid getting too carried away trading today’s data. The reaction would likely be quite a bit more aggressive if we see a similarly big drop/miss in tomorrow’s CPI data.
- Core Producer Prices m/m
- 0.0 vs 0.2 f’cast, 0.3 prev
- last month revised down 0.1
- Core Y/Y PPI
- 2.4 vs 2.7 f’cast, 3.0 prev
- Core Producer Prices m/m
08:34 AM
A hair stronger overnight with modest additional gains after PPI. MBS up an eighth and 10yr down 2.8bps at 3.877
10:53 AM
Initial rally stalled out at 9:30, but without a major correction. MBS still up an eighth and 10yr down 4bps at 3.866 (up from lows of 3.848)
02:38 PM
Sideways to slightly stronger near the days best levels. MBS up 6 ticks (.19) and 10yr down nearly 5bps at 3.857
04:24 PM
Heading out near the day’s best levels with MBS up 7 ticks (.22) and 10yr yields down 5.7bps at 3.848.
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