After a slow, slightly bearish start, treasuries and mortgage backs have worked their way back to unchanged or slightly better on the day. Most of the early news was not bond friendly as the Empire Manufacturing Index (New York State) jumped 8.99 points to plus 24.91. Good news is that the number was better than consensus. Bad news, the 6 month outlook dipped nearly 4 points. TIC data, the index used to track Foreign purchases of our debt didn’t help either. From November to January those across the pond cut their purchases of fixed income assets in half. That was evident in last week’s Refunding auctions which were not well received. Simply put, no one wants to extend duration in their portfolio’s as navigating the markets been one tricky adventure. NAHB, the Home Builders Market Index was the last of today’s data, posting a plus 2 point rise to 17. First time tax credits (the 8K wonder check) and steady traffic in builder models seem to have pushed the number.
Just out, comments by Minneapolis Fed Governor Kocherlakata that U.S. political uncertainty is problematic for future growth, inflation is relatively tame, and the jobless outlook in not comforting (sees above 9% throughout 2010) have all combined to lower yields and improve mortgage pricing a couple of 32’s. Nothing huge but certainly better than 7:30 this morning. Lots of first tier data this week with housing data, PPI, and CPI (inflation data) taking the top billing. Best to stay a little defensive and keep an eye on the “Headlines.”