Spoiler Alert: Yes, It Was War Headlines

Spoiler Alert: Yes, It Was War Headlines Need a way to explain overnight weakness in the bond market? War headlines. Need to know why bonds rallied sharply just after 10am ET to hit the best levels in 2 weeks? Yep, more war headlines. Granted, the 8:30am econ data was not completely ignored. A slightly softer-than-expected PCE inflation number helped bonds get back to unchanged levels, but a substantial majority of the day's volume followed the 10am news that essentially suggested the peace deal was approved, pending Trump's final sign off. Later in the day, separate newswires suggested Iran hadn't fully signed off, but no one seemed to care. Day over day gains were mild in the bigger picture, but resulted in the best trading levels in 2 weeks by the 3pm close.  Econ Data / Events Continued Claims (May)/16 1786.0K vs 1780K f'cast, 1782K prev Core CapEx (Apr) -1.1% vs 0.4% f'cast, 3.4% prev Core PCE (m/m) (Apr) 0.2% vs 0.3% f'cast, 0.3% prev Core PCE (y/y) (Apr) 3.3% vs 3.3% f'cast, 3.2% prev Core PCE Prices QoQQ1 4.4% vs 4.3% f'cast, 2.7% prev Corporate profitsQ1 -0.4% vs 5.7% f'cast, 5.7% prev Durable goods (Apr) 7.9% vs 3.5% f'cast, 0.8% prev GDPQ1 1.6% vs 2.0% f'cast, 0.5% prev GDP Final SalesQ1 1.5% vs 1.6% f'cast, 0.3% prev Jobless Claims (May)/23 215.0K vs 211K f'cast, 209K prev PCE (y/y) (Apr) 3.8% vs 3.8% f'cast, 3.5% prev PCE prices (m/m) (Apr) 0.4% vs 0.5% f'cast, 0.7% prev Market Movement Recap 08:19 AM Weaker overnight on reports of ongoing hostilities in Iran. MBS down over an eighth of a point and 10yr up 2.3bps at 4.507 09:17 AM Back near unchanged after data-driven rally. MBS down 1 tick (.03) and 10yr down half a bp at 4.479 10:59 AM quick rally on "deal" reports and a bit of pull back on "yeah but" reports. MBS up 2 ticks (.06) and 10yr down 2.4bps at 4.46 01:02 PM Near best levels. MBS up 5 ticks (.16) and 10yr down 3.4bps at 4.45