MBS MID-DAY: In Stunning Turn of Events, Economic Data Still Doesn’t Matter


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).

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