Despite a super narrow range throughout the day, last Friday saw 10yr yields close at the 2nd best levels of the year. With that in mind, it wouldn’t have been a surprise to see some push back into the center of the recently flat range today. In fact, that may well have been the case were it not for this morning’s weak Durable Goods data.
The Durables headline came in at -1.1 vs -0.6 forecast. The important “nondefense capital goods orders excluding aircraft” (or “Cap-Ex“) component was -0.2 vs a +0.3 median forecast. Bonds picked up just enough to put them in slightly stronger territory on the day, and there they remained–for the most part. Despite marginal weakness in the afternoon, 10yr yields hit their 2nd lowest closing levels of the year.
All that having been said, the movement was still muted. There wasn’t even enough intraday volatility for any lender reprices. Things could pick up tomorrow, especially in the afternoon if Yellen has anything interesting to say in her 1pm QA with the British Academy in London. This isn’t a venue or event that we normally look to for guidance. The only important part is that the Fed chair may chime in on the recent shift in tone among other Fed members regarding adjusting the policy path due to persistently low inflation.