Confirmation of What We Probably Already Knew
Bonds began the day in weaker territory after a slew of “not-too-terrible” economic data in Europe. Additionally, from a technical perspective, bonds probably were getting back into territory consistent with de-escalating from the recent British drama. As we continued to advise, this was never likely to be a sustainable source of positive momentum as much as a mere “re-set” of the a new higher range. In 3.56%, 10yr yields are saying they may have found a short-term floor until data becomes weak enough to coax them lower. Today’s ISM services data did NOT fit that bill, thus ushering in the day’s weakest levels just after 10am. Bonds clawed back a bit of territory after that early selling, but MBS remained roughly half a point lower by the 3pm CME close. Attention now turns to Friday’s NFP with tomorrow acting as more of a placeholder.
Econ Data / Events
ISM Services PMI
56.7 vs 56.0 f’cast
59.1 vs 60.9 prev
53.0 vs 50.2 prev
highest since March
+208k vs. +200k f’cast
Market Movement Recap
09:01 AM Weaker overnight and little-changed so far in domestic trading. MBS down just under half a point and 10yr yields up 6.6bps at 3.701
09:47 AM A bit more weakness ahead of the ISM release. MBS down almost 5/8ths and 10yr up more than 9bps at 3.729. corporate issuance and EU sell-off adding to the pressure
10:05 AM Additional weakness after slightly stronger ISM services data. MBS down more than 3/4ths and 10yr yields up 14.4 bps at 3.779
11:27 AM Generally calmer now as MBS bounce along the lows of the day, currently down 3/4ths of a point. 10yr still up 13.4bps at 3.771
01:34 PM Still flat with no major changes since the last update. MBS down about 3/4ths and 10yr up 13.4bps.
04:06 PM Decent little recovery heading into the close with MBS now down “only” half a point (they were down more than 3/4ths of a point at times today. 10yr yields are off the highs of 3.789, now down to 3.747.