Bonds Keep Fading; Cue The CPI Anxiety

Bonds Keep Fading; Cue The CPI Anxiety This morning's commentary headline was "if bonds aren't rallying, they're selling."  It could just as easily have been the recap.  In general, the entire week was defined by capitulation as traders came to terms with last week's jobs report and the Fed's persistent messaging.  While it's true that today's inflation expectation component of the Consumer Sentiment data may have greased the skids for more weakness, it probably didn't have a material impact on where we ended up on the week.  The several failed attempts to close below 3.62% in 10yr yields meant that we'd need an unexpectedly friendly CPI report next Tuesday to restore the range.  That said, bonds seem more content to worry about unexpectedly unfriendly data until it can be ruled out. Econ Data / Events Consumer Sentiment 66.4 vs 65.0 f'cast, 64.9 prev 1yr inflation 4.2 vs 3.9 prev 5yr inflation 2.9 vs 2.9 prev Market Movement Recap 09:24 AM Flat in Asia, weaker in Europe, and now a modest attempt to bounce in the US.  10yr up 2bps at 3.683 and MBS down 1 tick (.03). 10:57 AM Treasuries at weakest levels with 10yr up 5.5bps at 3.719.  MBS down just over an eighth on the day, near but not below the AM lows. 01:55 PM Additional weakness as the day continues.  MBS down more than a quarter point and 10yr up 7bps at 3.734. 03:53 PM More time, more weakness--all very gradual today.  MBS down just over 3/8ths.  10yr up 8+ bps to 3.749.
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