Biggest Rally in Over a Decade After CPI Overdelivers

You may have been tired of hearing just how important Thursday’s CPI would be.  There may not be another future installment of economic data that we’ve ever focused on so intently so far in advance.  But not only did CPI deliver, it OVERDELIVERED (and even that is an inadequate word to capture the grandeur).  10yr yields dropped the most in a single day since 2009.  Same story for mortgage rates and our records only go back to 2009 there, so it could be an all-time record.  Once the celebration is over, we can talk about whether this rally was a bit overdone and at risk of a correction, or confirmation of things to come.  Today’s video recap digs into those questions in greater detail.  
(NOTE: bonds are closed tomorrow for the Veterans Day holiday). 

Econ Data / Events

monthly CORE CPI

0.3 vs 0.5 f’cast, 0.6 prev

yearly CORE CPI

6.3 vs 6.5 f’cast 6.6 prev


0.4 vs 0.6 f’cast, 0.4 prev


7.7 vs 8.0 f’cast, 8.2 prev

Market Movement Recap

08:35 AM Huge gains after CPI with MBS up a full point already and 10yr yields down 15.5bps to 3.942.  Stocks up 3%.  

09:42 AM Huge gains getting huger.  MBS up 1.5pts and 10yr down 21.3 bps to 3.884.  Stocks up 3.36%.  Market fully trading a Fed pivot.

12:11 PM Still holding the big AM gains.  MBS up 1.625 to 1.75 points (yes, that’s in a league with only a few other players, historically).  10yr yields are down 24+ bps vs 5pm close and roughly 30bps from the official 3pm close, making it the biggest drop since 2009.  Currently 3.856.

01:03 PM 30yr bond auction much stronger than expected.  10yr down a few bps on the news at 3.846.  MBS up several ticks, currently up roughly 1.75 pts. 

03:03 PM Impressive ground holding continues.  In fact, 10yr has rallied several bps in to the 3pm close, now down 27bps at 3.829.  MBS up nearly 2 points.  
Source: Mortgage News Daily