Bond markets had an utterly copacetic day, starting out just barely positive, gaining nominally with each round of economic data and continuing to trickle higher into the close.
In one of the MBS Live updates this morning, we noted that the reaction to the data did NOT suggest markets were adjusting to “worse-than-expected” economic news, but rather simply not seeing much by way of positive news. Put another way, here we are…waiting for something (anything?) to discredit what may turn out to be an overly pessimistic jobs report last week, yet nothing has been quite bullish enough to definitively accomplish that.
Today’s data, in particular, expressed its weakness at the internal level. In fact, judging by headlines (opposite of “internal”), the only weak report was NAHB’s Housing Market Index. The subcomponents told a different story, especially for Jobless Claims where Continued Claims surged back over 3 million and for the Philly Fed Index which saw sharp declines in New Orders and the 6-month outlook.
This economic weakness along with the corporate hedging considerations discussed this morning is more than enough to make for the steady improvements.