Rates Mixed Ahead of UK CPI Release Tomorrow

Rates mixed despite better-than-expected start to corporate earnings. Swap rates and Treasury yields were mixed today despite a positive start to earnings season, with the 2 and 10-year yields falling ~2 bps and ~1 bp, respectively. Though solid reports from firms such as Goldman Sachs and Apple resulted in boosted share prices, Treasurys traded sideways in a generally quiet session. Major indices S&P 500 and NASDAQ saw gains of ~1% each, the former seeing a larger gain of 1.14% on the day. Meanwhile, the price action remained muted overseas in the UK after several days of volatility. That said, tomorrow will see the UK’s latest CPI print, which could roil the markets once again if it comes in above consensus estimates of 10%.   

Industrial production increases MoM, exceeding expectations. The U.S. Industrial Production index increased 0.4% MoM, higher than the 0.1% consensus expectation and flipping the script on last month’s -0.2% decline. Industrial production measures output from businesses in the industrial sector of the economy. Increased output is generally a positive sign for the economy. As conditions tighten, production should decline, however data releases continue to offer mixed signals.

Day ahead. September data on housing starts and building permits will be released at 8:30 AM ET. Fed voter James Bullard (hawk) will make public comments at 7:30 PM ET, while Fed non-voters Neel Kashkari (hawk) and Charles Evans (dove) will speak at 1:00 PM ET and 6:30 PM ET, respectively.