While yesterday was a surprise due to changes in Fed forecasts, today was anything but–at least if you bought in to the notion that yesterday’s sell-off was a mathematical event based on markets adjusting present day trading levels to long-term forecasts. Also helping the sell-off wrap up quickly was the fact that Yellen’s singular definition of “considerable” (even if she added caveats, the only time frame she offered was “6 months,” which is an unquestionable departure from Bernanke) left little uncertainty as to how to run the math for that mathematical sell-off.
Morning data could be argued to be a wash with weaker home sales, lower than previous Jobless Claims that were still higher than expected, and a seemingly positive Philly Fed survey that had some downbeat internal components. It’s one thing to have one report offset another, but all three of today’s reports ‘offset themselves,’ so to speak.
The net effect was a +0-01 change in production MBS and a half a bp increase in 10yr yields that remained well under 2-day highs. Pretty uneventful.