Mortgage backed securities (MBS) could not go higher as they opened right at the top of the intra-day trading channel. The only direction that they could move was lower or at the very best…sideways for the session. Retail Sales matched expectations but had very large upward revisions to the prior month, the Chinese GDP data was strong, and both combined to pressure MBS today.
Retail Sales: The June data matched expectations with the headline reading hitting 0.5% vs. estimates of 0.5%. The May reading was revised upward significantly from 0.8% to 1.3%. Same story when you strip out Autos. June was 0.4% vs. estimates of 0.4% and May was revised upward from 0.9% to 1.4%.
Manufacturing: The NY Empire State regional Fed report/manufacturing survey was very strong with a 22.6 vs. estimates of 22.0 reading.
On Deck for Tomorrow: Fed Chair Jerome Powell, Monetary Policy Senate Banking Committee, Industrial Production, Capacity Utilization and the NAHB Housing Market Index.
Across the Pond
China: 2nd quarter GDP was stronger than expected (1.8% vs. estimates of 1.6%).