Steering clear of unfriendly economic data has been an increasingly challenging task for the bond market in April. While it might be an overstatement to say we’re going out with a bang, today’s Employment Cost Index (ECI) is at least a loud pop. ECI–a measure of labor costs and compensation (including benefits)–is not a report that had been on the trader radar as a big ticket market mover until Powell began mentioning it regularly in the past few years.
Today’s installment painted an unfriendly picture for inflation/rates by suggesting the progress seen through Q4 was reversing in a major way in Q1.
The bond market reaction was clear and immediate at 8:30am, even if it wasn’t as huge as we might see for a CPI or NFP that suggested hotter inflation or spending power.
Source: mortgagenewsdaily.com