Lots of important numbers came out today. PPI was up 1.8%, but only 0.2% ex-food and energy, the most volatile components. Year over year PPI was up over 9%, but 3% on the core data. The retail sales report was slightly weaker than expected. Normally I would expect bond prices to go up on these reports, and yields (rates) to come down. So far, this is true on the treasuries, and not so much on the mortgage bonds. However, after yesterday's strong comeback right into the close, it's not a surprise to see a slight pullback this morning. We are facing three layers of resistance in the 50 day, 200 day, and 100 day moving averages, which held us back last week as a group.
My initial take today is to float rates and see how the markets digest this data. I will follow this up with an update later today. Have a great morning!
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