Even More Confirmation Throughout The Day

Even More Confirmation Throughout The Day It was heartening to see bonds erase yesterday's losses by the time domestic trading got underway today. Unmitigated victory would have required flat/higher oil prices. Instead, we were forced to wonder how much credit to give lower oil prices versus the expectation that longer-term rates would paradoxically appreciate a more hawkish Fed stance. This uncertainty increasingly vanished throughout the day. Oil prices steadily rose more than $3 between 8:30am and 1pm, but bonds were sideways to stronger the entire time. There's still some caution suggested by a technical floor at 4.94%, but yields are now flirting with a break below that level in after-hours trading (even as oil prices remain more than $2 higher than this morning). We're not out of the woods yet, but today looks to have been a step in the right direction. All this having been said, rates aren't immune from future spikes if econ data, issuance, or fuel prices surprise to the upside.  Econ Data / Events Building Permits (Aug) 1.394M vs 1.41M f'cast, 1.433M prev Continued Claims (Sep)/05 1730.0K vs 1780K f'cast, 1774K prev Housing starts number mm (Aug) 1.275M vs 1.31M f'cast, 1.239M prev Jobless Claims (Sep)/12 196K vs 208K f'cast, 206K prev Philly Fed Business Index (Sep) 37.8 vs 30.5 f'cast, 47.4 prev Philly Fed Prices Paid (Sep) 48.60 vs -- f'cast, 40.90 prev Market Movement Recap 12:21 PM MBS up almost half a point and 10yr down 7.7bps at 4.942 01:56 PM MBS up half a point and 10yr down 7.2bps at 4.946 03:20 PM Best levels of the day. MBS up 18 ticks (.56) and 10yr down 8.5bps at 4.934