Markets Were Skeptical of Mid-Day Peace Headlines and That Was a Good Instinct

Markets Were Skeptical of Mid-Day Peace Headlines and That Was a Good Instinct A few hours into the trading session, newswires came out that seemed to offer the best hopes of a peace deal yet. Specifically, it said that Trump was in the situation room to make a final determination on the peace deal and that issues required for the infamous one page memo had already been agreed upon. Markets were surprisingly cautious about reading too much into that, although it briefly took yields to their lowest levels of the week. By the end of the day, we learned that no decision had been made and negotiations weren't any farther along than already assumed based on the week's earlier "close to signing the memo" news. Bonds faded back toward opening levels to end the day roughly unchanged. Next week brings more headline-watching as well as the month's biggest slate of domestic econ data. Econ Data / Events Wholesale Inventories 0.5 vs 0.8 f'cast, 1.3 prev Chicago PMI 62.7 vs 50.5 f'cast Market Movement Recap 08:33 AM Fairly flat overnight and little-changed to start. MBS up 2 ticks (.06) and 10yr unchanged at 4.445 10:57 AM Gaining ground after Trump "final decision pending" headlines. MBS up 3 ticks (.09) and 10yr down 1bp at 4.436 02:24 PM Fairly flat. MBS up an eighth and 10yr down half a bp at 4.438