After a fairly slow start to the week, bond markets threatened to move higher yesterday afternoon and into the overnight session. With bonds trading at their weakest levels of the week, things looked fairly gloomy right up to the 8:30am release of the Retail Sales data. After the data came out weaker than expected, the tone reversed abruptly, ushering in the best levels of the week before flattening out in the afternoon.
This “best/worst” business is a bit less dramatic than it sounds considering the range in 10yr yields had been roughly 2.41 to 2.44. Overnight trading pushed us up to 2.47. Intraday trading got us down just below 2.41, and we’re heading out the door at 2.42. It’s a similar story for MBS, which were at their weakest levels of the week to start the day, and moved quickly to the week’s best levels after Retail Sales.