Mortgage bond prices opened negative on the day despite bond friendly
data. The initial reaction was positive but things quickly swung the
other way. Fortunately we only erased the gains from yesterday
afternoon.
Weekly jobless claims @ 386k, expected @ 375k. The
consumer price index fell 0.3%, expected down 0.2%, The core, which
excludes volatile food and energy prices, rose 0.2% as expected. The
data continues to show economic weakness with little or no price
pressures which generally bodes well for low rates.
We still have a 30Y auction this afternoon.
Spain
saw government debt ratings downgraded by Moody's overnight. A debt
rating downgrade using means higher rates for them which is the last
thing they need as unemployment is already very high and their borrowing
costs already show increased yields. However, other euro zone bonds
are showing lower yields this morning on increased demand such as the
UK, Germany, and Italy.
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