Article Summary
Bonds ended almost perfectly flat, with two types of rate/bond watchers – those who tuned in late to see no change and those who were tuned in through mild volatility this morning, sparked by lower-than-expected inflation but driven by other factors. Unchanged is unchanged, but the weakened phase was due to risk-on trading and tariff headlines from China.
What This Means for You
- Be aware that a decent result may not always help bonds, and weakness may be driven by other factors.
- Keep a close eye on risk-on trading and tariff headlines from China, as they can impact bond performance.
- Recognize that unchanged is unchanged, even with some volatility during the day.
- There is a potential risk of increased yields and worsening mortgage rates due to various factors.
Original Post
Bonds End Almost Perfectly Flat
Tue, May 13 2025, 5:07 PM
There are two kinds of rate/bond watchers today: those who tuned in late in the day to see bonds almost perfectly unchanged and those who were tuned in through the mild volatility this morning. The former group would simply shrug and go back to whatever it was they were doing while the latter might be frustrated to see bonds losing ground on a morning where inflation came in lower than expected. For the frustrated crowd, this was the plan for today–the asymmetric risk discussed yesterday. A decent result was never likely to help bonds. The subsequent weakness was driven by other factors, not CPI (risk-on trading and a series of tariff headlines from China). Even then, unchanged is unchanged.
- Monthly Core CPI
- 0.237 vs 0.3 f’cast, 0.1 prev
- Annual Core CPI
- 2.8 vs 2.8 f’cast, 2.8 prev
- Monthly Core CPI
08:48 AM
MBS up about an eighth and 10yr down 2.4bps at 4.446
09:58 AM
Losing ground in the NYSE session. 10yr up 0.4bps at 4.474. MBS back to unchanged.
12:09 PM
New lows. MBS down 3 ticks (.09) and 10yr up 2.4bps at 4.492
04:49 PM
Decent late bounce. 10yr roughly unchanged at 4.47. MBS down 1 tick (.03)
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Key Terms
- Bonds Flat, Inflation, Risk-on Trading, Tariff Headlines, Volatility
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