Right there in the title of the first commentary of the day: “more economic data that probably won’t matter.” There’s always some small tinge of doubt in my mind before I preemptively dismiss the importance of things that have historically been important. That’s probably why I qualified it with the “probably.” But now we see that was probably unnecessary. Probably.
Who knows how markets might have reacted if this morning’s wage/spending data had been much farther from expectations? Considering that this morning’s batch of economic data would certainly have been a market mover at most other moments in market history, the fact that it was completely overlooked says a lot about the current environment.
Some market-watchers out there may even be a bit confused as to why Treasuries and MBS IMPROVED after STRONGER-than-expected Chicago PMI and Consumer Sentiment at 9:45 and 9:55am respectively. Traditional approaches don’t really offer a great way to account for that. In today’s case, there happened to be headlines and a speech from Britain’s Prime Minister concerning a “severe” terrorism alert. UK bond markets led the charge toward lower yields into 10am and everything has leveled off rather uneventfully since then. Net/net, 10yr yields are perfectly unchanged and MBS are up 3 ticks (Fannie 3.5s).