Bonds took the morning's PPI gains and held them into the close. The 30-year finished at 6.69%, down 5 basis points on the day and the lowest MND has printed in nearly four weeks.

The whole day was decided at 8:30 AM ET. Headline PPI came in flat at 0.0% month-over-month against a +0.2% estimate, core PPI landed in line at 4.2% year-over-year, and jobless claims at 209K did nothing to argue against it. UMBS 5.0 closed at 96-32, up 4 ticks, and the 10-year Treasury settled at 4.643%, down 5.3 basis points from Wednesday's 4.696% close. Gains extended across the curve — the 2-year, 5-year, and 30-year all finished lower in yield. What stands out is that nothing gave the gains back. Bonds rallied on the data and then spent seven hours not selling off, which is a more meaningful signal than the size of the move.

For borrowers, this is the third straight session of improvement and rate sheets are finally reflecting it. Two clean inflation prints in two days — CPI Wednesday, PPI Thursday — took the near-term upside risk off the table. The calendar is quiet from here: nothing scheduled Friday, and the next data of consequence is Retail Sales on Tuesday, August 18, followed by Housing Starts on the 19th. That leaves a stretch where pricing is set by positioning rather than headlines, with the September FOMC meeting still the event that matters most.

— David Burson, NetRate Mortgage