Ultimately Uneventful Despite Modest Weakness

Ultimately Uneventful Despite Modest Weakness Bonds lost ground modestly today with the ultimate damage being roughly an eighth of a point for MBS and less than a bp for 10yr yields. The selling was led by the short end of the curve (i.e. 2yr yields were up 1.5bps). There wasn't any obvious catalyst apart from an ongoing surge in fuel prices. Perhaps most notably, fuel futures peaked at the same time as bond yields and both declined together after that. We're also not bothered by the short end leading the selling considering how resoundingly it led the rally over the past 2 days. Bottom line: this feels like incidental consolidation after a solid 2-day rally and not something that's indicative of new momentum.  Econ Data / Events Jobless Claims (Jul)/11 208K vs 217K f'cast, 215K prev Philly Fed Business Index (Jul) 41.4 vs 13 f'cast, 10.3 prev Philly Fed Prices Paid (Jul) 53.90 vs -- f'cast, 53.20 prev Retail Sales (Jun) 0.2% vs 0.2% f'cast, 0.9% prev Retail Sales Control Group MoM (Jun) 0.5% vs 0.5% f'cast, 0.7% prev Market Movement Recap 08:31 AM weaker overnight and no reaction to econ data. MBS down more than an eighth and 10yr up 3.5bps at 4.586 11:37 AM Strongest levels. MBS down only an eight and 10yr up 2.2bps at 4.572 02:00 PM MBS down 3 ticks (.09) and 10yr up 1.6bps at 4.566
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