The balance of this week’s economic data was unequivocally “not enough” to remove the stench of September tapering from MBS and Treasuries. It was all very mathematical really. Each of the three days with something to offer in terms of econ data (Tue, Thu, Fri) got it’s chance to make counterarguments against September tapering. Not only did some of the reports argue FOR September, but those that didn’t were fairly wishy-washy about it. For instance, a print of 80.0 is not cutting it as far as raising alarm bells that the economy can’t handle higher rates (see chart below). The ‘delayed reaction’ contingent may end up having a point, but that’s precisely why we’ve been talking about tapering for so long without actually doing it (so rates could rise without any material policy change, giving the Fed a chance to observe the effects of higher rates before further committing to them). Bottom line, no moon shooting this week. No one wants to catch the falling MBS/Treasury knife on a Friday ahead of a potentially thinly staffed week ahead.