MBS Day Ahead: Syria Headlines Help, but CPI, Auctions, and Fed Remain in Focus

Posted To: MBS Commentary

Bonds were flat yet again in the overnight session, but began to improve after Trump tweeted "get ready Russia," missiles "will be coming" in response to rising tensions in Syria. As can be seen in the following chart, this was somewhat of a big deal for bonds, and not much of a deal for stocks. Ultimately, it took 10yr yields back in line with recent lows (slightly below, to be fair). The focus of the day remains on the Consumer Price Index for bond markets. It won't necessarily have a huge impact, but it certainly reserves that right. It's notable that the forecast for core year-over-year CPI is up to 2.1% now after months at 1.8%. This is a case where merely hitting the median forecast consensus could be bad for bonds. By that same rationale, it's unclear...(read more)

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