Ugly Snowball Selling Thanks to Oil and Inflation Data

Ugly Snowball Selling Thanks to Oil and Inflation Data MBS lost nearly a full point by 4pm ET and 10yr yields were up 11.4bps at 4.95%. This is the highest since October 2023 when 10s briefly hit 5.006%.  At one point in the overnight session, yields were slightly LOWER on the day. Things changed in waves. First wave: oil prices surged overnight and had already broken $100 but the time PPI came out. Second wave: PPI was roughly in line with forecasts, but internal components suggested a 0.1 increase to core PCE inflation. The reaction was the sharpest of the day for bonds. Third wave: late day illiquid redistribution after 30yr bond auction (although this could also be incidental drift ahead of Friday's CPI data). If we could only focus on 2 things, it would be the acceleration in the fuel price trend and the unfriendly PCE implications in today's PPI data.  Econ Data / Events Core PPI m/m (Aug) 0.2% vs 0.3% f'cast, 0.2% prev Core PPI y/y (Aug) 4.6% vs 4.6% f'cast, 4.2% prev Jobless Claims (Sep)/05 206K vs 205K f'cast, 206K prev PPI m/m (Aug) 0.4% vs 0.4% f'cast, 0% prev PPI y/y (Aug) 5.4% vs 5.3% f'cast, 4.7% prev Market Movement Recap 09:39 AM Much weaker on a combo of oil and PPI reaction. MBS down 5/8ths and 10yr up 8bps at 4.92 01:09 PM MBS down 22 ticks (.69) and 10yr up 8bps at 4.92 03:39 PM MBS down just over 7/8ths of a point and 10yr up 11.6bps at 4.957