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Yields retreat after softer CPI and PPI data lifts bond prices

Both Tuesday's CPI and Wednesday's PPI came in below expectations, sending the 10-year yield back to around 4.54% and boosting MBS by 3 ticks, about 0.09.

Reported · Written up by our desk · Inflation

Mortgage News Daily reports that both Tuesday's CPI and Wednesday's PPI were lower than expected, triggering bond rallies that continued beyond the initial reaction. The outlet says Tuesday's move faded more gradually after the first pop, while Wednesday's rally held at a more moderate pace as trading progressed.

According to Mortgage News Daily, the net effect was that yields fell back to levels seen in the minutes after Tuesday's CPI, with the market implying resistance around a 10-year yield level of 4.54%. The outlet also highlighted that rate watchers should consider July's shift toward higher fuel prices, since the weaker CPI and PPI dynamics benefited from June's lower fuel costs.

Mortgage News Daily added that after the PPI release, bonds started weaker but strengthened later in the day. It said MBS rose by 3 ticks, about 0.09, and the 10-year yield dropped by 1.4 basis points to 4.574%.

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