Bonds Preserve Most of Last Week's Gains

In the financial realm, a significant event took place as the market resumed operations after the Thanksgiving break. Bonds managed to retain a substantial portion of the gains witnessed during the previous week. This might not have been immediately obvious when focusing solely on day-to-day losses. However, a quick rally on Friday afternoon led to artificially strong closing levels. Regardless of how one analyzes it, today's yields were approximately 20 basis points lower than those at the end of the week prior. In the absence of any bond-friendly economic data, this performance was highly satisfactory. The upcoming days are likely to be influenced by the incoming data. As for today itself, it was relatively uneventful, with "new month" and repositioning trades contributing to a midday recovery from early weakness.

Uncover the Bond Market's Dominance in Last Week's Gains

GDP Insights

The GDP figure came in at 2.8, in line with the forecast of 2.8. This indicates a stable economic performance in terms of the overall output. It provides a benchmark against which other economic indicators can be evaluated and gives an indication of the country's economic health.

Such a stable GDP reading suggests that the economy is continuing on a steady path, which can have implications for various sectors and financial markets. It provides a sense of continuity and helps in assessing the long-term economic outlook.

Jobless Claims Analysis

Jobless claims stood at 213k, slightly lower than the forecasted 216k. This shows a relatively healthy labor market, with fewer people filing for unemployment benefits. A lower jobless claim figure indicates that businesses are maintaining their workforce and there is a certain level of stability in the job market.

It is an important indicator as it reflects the economic conditions and the ability of businesses to retain their employees. A consistent trend of low jobless claims can be a positive sign for the overall economy and can have an impact on consumer spending and other economic activities.

Continued Claims Overview

Continued claims reached 1.907m, close to the forecasted 1.910m. This metric provides an understanding of the number of people who are still receiving unemployment benefits after an initial period. It gives an indication of the persistence of unemployment issues and the level of support needed in the labor market.

A relatively stable or slightly lower continued claims figure can suggest that the labor market is gradually improving and that the number of long-term unemployed is not increasing significantly. It is an important aspect to consider when analyzing the overall employment situation.

Core PCE Details

Regarding Core PCE, the Q/Q reading was 2.1, slightly lower than the forecasted 2.2 and lower than the previous reading of 2.8. This metric measures the core inflation rate and provides insights into the underlying inflation trends in the economy.

A lower Core PCE reading can indicate that inflationary pressures are moderating, which can have implications for monetary policy and interest rates. It helps in understanding the dynamics of price increases and their impact on the economy.

MBS and Treasury Price Movements

In the morning, there was a giveback of some of Friday's ephemeral gains. MBS dropped 10 ticks (.31), and the 10-year yield increased by 5 basis points to 4.221. This shows the volatility in the market and the impact of short-term fluctuations on different asset classes.

During the midday period, there were decent gains. No obvious motivations were apparent other than the flaring up of geopolitical tensions. MBS decreased by 5 ticks (.16), and the 10-year yield rose by 1.1 basis points to 4.182. Such movements highlight the influence of external factors on the financial markets.

In the afternoon, there was a small friendly bump after Fed's Waller's comments. MBS went down an eighth, and the 10-year yield increased by 1.2 basis points to 4.183. These comments from the Fed can have a significant impact on market sentiment and asset prices.

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