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Bonds Losing Ground on Stronger CPI Data
  • CPI 
    • 0.1 vs 0.1 m/m
    • 1.6 vs 1.6 y/y
  • Core CPI
    • 0.3 vs 0.2 m/m
    • 2.1 vs 2.0 y/y
  • Jobless Claims
    • 209k vs 223k 

The modest increase in core CPI numbers was enough to spook the bond market to some extent just now.  10yr yields rose quickly from 2.06 to 2.09%, but look like they're trying to recover at the moment (2.08%-ish currently).

At first glance, a 0.1% beat in CPI may not seem like a big deal (and it may not prove to be a big deal unless it gets to be a trend).  Inflation is considered to be a sleeping monster that the bond market doesn't have to worry about.  If it looks like it's stirring, there's plenty of weakness it could create (but again, that would take multiple reports over several months to confirm).  Today, we're just seeing that bonds would "care" if presented with sufficient evidence.

MBS / Treasury Market Data

FNMA 3.0
101.78
-0.06
FNMA 3.5
102.69
-0.13
2 YR
1.5270
+0.0410
10 YR
1.6160
+0.0540
Pricing as of: 8/19 7:31AM EST
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