MBS Day Ahead: CPI Comes Out Swinging; Auction Cycle Conclusion Up Next

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Posted To: MBS Commentary

Today begins with a modestly weaker CPI (consumer price index) report generating an impressive surge in volume. In fact, the volume in the minute following the CPI release was roughly double that seen in the minute following the last NFP report. This reinforces what we've been discussing with respect to CPI taking the reigns from NFP as the most important piece of econ data for bond markets on any given month. This only becomes clearer when we consider the last time a minute of volume was as big was also due to a CPI report. While volume is nice, and while the rally is nice, there's one big, ongoing problem, and it looks like this: Bottom line: bonds continue struggling to break below the 2.95% technical barrier. Even after this morning's CPI data, the best bonds could manage was…(read more)

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