Technicals Help Reconcile Selling Pressure

Technicals Help Reconcile Selling Pressure In the realm of market commentary, technicals are a vastly overused explanation for past movement, let alone for the prediction of future movement. In this week's case, however, the consolidation pattern in bond yields offers one of the only ways to understand the otherwise inexplicable selling pressure. Long story short, the weakness was just the right size and pace to complete the pattern heading into events with more power to inspire definitive reactions and lasting momentum. Econ Data / Events Consumer Sentiment (Dec) 53.3 vs 52 f'cast, 51.0 prev Sentiment: 1y Inflation (Dec) 4.1% vs -- f'cast, 4.5% prev Sentiment: 5y Inflation (Dec) 3.2% vs -- f'cast, 3.4% prev U Mich conditions (Dec) 50.7 vs 51.3 f'cast, 51.1 prev Core PCE (m/m) (Sep) 0.2% vs 0.2% f'cast, 0.2% prev Core PCE Inflation (y/y) (Sep) 2.8% vs 2.9% f'cast, 2.9% prev Inflation-Adjusted Spending (Consumption) (Sep) 0.3% vs 0.3% f'cast, 0.6% prev Personal Income (Sep) 0.4% vs 0.3% f'cast, 0.4% prev Market Movement Recap 09:29 AM Modestly weaker overnight but recovering a bit.  MBS down 1 tick (.03) and 10yr up 1.2bps at 4.11 10:59 AM 10yr yields are up 3bps at 4.128. MBS are down only 3 ticks (.09) on the day. 12:20 PM MBS down an eighth and 10yr up 3.1bps at 4.129