Still a Resilient Day Despite Afternoon Weakness

Still a Resilient Day Despite Afternoon Weakness The day's most notable development, by far, was the speech from Fed Governor Waller in which he said the Fed probably didn't need to hike at the upcoming meeting (depending on data, of course). Fed Funds Futures reacted immediately and mostly held those gains all day. The longer end of the curve ended up giving back most of the initial gains, albeit very gradually. The net effect is that we're still in "wait and see" mode--but a slightly less painful version--ahead of Friday's jobs report and next week's inflation data. Econ Data / Events Continued Claims (Aug)/22 1779.0K vs -- f'cast, 1778K prev Jobless Claims (Aug)/29 206.0K vs 205K f'cast, 203K prev Trade Gap (Jul) -88.60B vs $-90B f'cast, $-73.3B prev Unit Labour Costs QoQ FinalQ2 1.2% vs 1.3% f'cast, 1.3% prev Market Movement Recap 09:20 AM Slightly stronger overnight with additional gains after Waller speech. MBS up a quarter point and 10yr down 3.6bps at 4.744 10:10 AM Off best levels. MBS up 5 ticks (.16) and 10yr down 2.2bps at 4.758 01:33 PM MBS up 6 ticks (.19) and 10yr down 2.5bps at 4.756