MBS are down 6 bps on the morning.
Bonds began the overnight session at unchanged levels and held close to there through 4am ET. EU bonds rallied and faded over the next 4 hours, pulling Treasuries along for the ride. By 8am, 10yr yields were almost perfectly unchanged.
Starting around 8:15am, bonds began losing ground for reasons unknown. The most likely suspect was a headline regarding the sale of some of Signature Bank’s assets that came out a few minutes prior.
Stocks rose with US index futures as a rally in Chinese tech shares boosted sentiment and concern about contagion from banking turmoil continued to wane.
Consumer confidence improved slightly in March, according to the Conference Board. Surprisingly, the bank failures didn’t have much of an impact and the survey was conducted about 10 days after the failure of Silicon Valley Bank.
The latest results also reveal that their expectations of inflation over the next 12 months remains elevated—at 6.3 percent. Overall purchasing plans for appliances continued to soften while automobile purchases saw a slight increase.”
That inflationary expectations number for the next 12 months is not good. We know the Fed pays close attention to inflationary expectations in these consumer confidence surveys because this gets baked into the cake with wage negotiations. The 6.3% number does seem pretty far from the 3.8% number we saw in the University of Michigan survey earlier this month.
There are only 578,000 active listings nationwide. (This is out of 142 million housing units.)
Another Boring (But Resilient) Day
After the past few weeks, boring trading days aren’t necessarily unwelcome. Their only real downside is that there’s not much to say about them. Bonds are waiting for three things: more banking drama (or the progressive absence thereof), economic reports that flesh out the inflation picture