Bonds Rattled By Surprisingly Big Beat in Spending Data Today's big surprise was the PCE price index component of Q1 GDP.  GDP itself was weaker than expected, but even that was explained away by components not related to private domestic consumption.  Focusing on the latter makes Q1 look just as strong as any of the past few quarters.  PCE did the most damage for two reasons.  It was MUCH higher than expected (3.7 vs 3.4) and that implies tomorrow's PCE data (a monthly version of today's quarterly report) is also at risk of coming in higher than expected.  This "sneak peek" effect is only a concern once per quarter with the "advance" release of GDP. Econ Data / EventsJobless Claims207k vs 214k f'cast, 212k prev Continued Claims1781k s 1814k f'cast GDP1.6 vs 2.5 f'cast, 3.4 prev Q1 PCE Prices 3.7 vs 3.4 f'cast Wholesale Inventories-0.4 v s +0.2 f'cast Market Movement Recap08:41 AM Bonds losing ground quickly after 8:30am data.  MBS down a quarter point.  10yr up almost 5bps at 4.691. 11:07 AM Weakest levels at 9:30am and pushing back slightly since then.  10yr up 6.4bps at 4.706.  MBS down 10 ticks (.31). 01:28 PM No reaction to 7yr Treasury auction.  10yr up 6.1bps at 4.703.  MBS down 11 ticks (.34) 03:35 PM Increasingly flat at the same old levels.  10yr up 6bps at 4.702 and MBS down 10 ticks (.31).