Good morning Insighters and happy Thursday...
Well as seemingly commonplace lately, all the action anticipated takes place before relevant news and the actual news brings us little to nothing. We saw a pretty volatile 2 days (afternoon session on Tue and all day Wed) see large movements in bonds from -68bps to a retracement of +44bps in anticipation of today's release. And what did all this bring us?
basically nothing! Here is the data driving today's markets.
Initial Claims: Actual 434K, prior 474K (consensus was 423K)
Continuing Claims: Actual 3756K, prior 3733K (consensus was 3700K)
PPI: Actual 0.8%, prior 0.5% (consensus was 0.5%)
Core PPI: Actual 0.3%, prior 0.3% (consensus was 0.2%)
Retail Sales: Actual 0.5%, prior 0.4%
Retail Sales ex-auto: Actual 0.6%, prior 0.8%
The markets today are relatively flat after the release of these numbers.
The FNMA 4.0 coupon closed yesterday at 100.156 (up from its intraday lows of 99.719)
Today we opened -3bps and currently sitting at -6bps. The talk of concern is the very small yields being gained from the bonds right now as they are at 2011 lowest levels. Some traders were caught off guard from the last 3 weeks rally but my concern is will this be sustainable or are we to see some sell off appear in the days ahead?
I expect today's trading range to land between the 99.8 - 100.25 levels.
Only significant event to drive in either direction is the feds 16B auction of 30y notes this afternoon. Traders are anticipating a strong buy for these to follow suit as the 10y went yesterday. If this occurs we could see us near the top of the range.
Lock Advice...
If closing is
7-10 days - LOCK
14+ days - Lock you can float but I think risk far outweighs any potential slight gain
Make it a great day and use the last 2 days volatile swings to push your buyers off the fence and get them moving while rates are still favorable and at 2011 lows!
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