MBS and Treasury yields moved into weaker territory after the 8:30am release of CPI and Jobless Claims this morning. One can only surmise that investors were relieved, to some extent, to see that consumer prices didn’t fall victim to the same cataclysmic failure seen in producer prices yesterday. Perhaps a few other investors read into the size of the ‘beat’ in Jobless Claims (255k vs 270k forecast, another generational low).
While there was definitely movement at 8:30, it didn’t ultimately create any new realities for bond markets. Treasuries were already in the process of moving weaker in the overnight session. Although the 8:30am reaction added disproportionately to the weakness, closing levels were very much in line with the trend.
In other words, bond markets were a bit more resilient than it seemed like they should have been as the day progressed. This was especially true in light of the strong performance in equities and the recently strong connection between equities and bonds. Ultimately, bond markets simply looked like they were leveling off after 2 strong days of trading while stocks moved up right to the bleeding edge of their current glass ceiling (2023 in terms of SP or 2020 in terms of SP futures as seen below).