Bonds Looking Somewhat Optimistic Ahead of CPI

by Matthew Graham

Bonds Looking Somewhat Optimistic Ahead of CPI Bonds improved modestly on Tuesday which is actually a somewhat resilient/optimistic showing. The ongoing correlation with oil prices suggested less improvement (oil actually closed higher on the day). In addition, it's usually less of a surprise to see bonds struggle to rally on the first half of an auction cycle week. Granted, a spicy CPI on Wednesday would easily push back against any optimistic narratives, but if the data is tame, perhaps we're seeing hints that bonds would be more willing to respond than normal. Market Movement Recap 09:32 AM MBS up an eighth and 10yr down 3bps at 4.68 01:03 PM MBS still up an eighth. 10yr down 2.7bps at 4.682 03:45 PM super sideways. MBS up 3 ticks (.09) and 10yr down 1.7bps at 4.692