Rally Accelerates After Weak PMI Data. Fed Coming Up Next Week
Eurozone PMI data was much weaker in the overnight session, leading to a big rally in bonds at home and abroad. 10yr yields were thus able to walk in the door down several bps, trading just over 2.80% after being nearly 30bps higher yesterday morning. Weaker non-manufacturing PMI in the U.S. only added to the gains at 9:45am. Bonds held most of those gains by the end of the trading day. Next week’s headliner is the Fed Announcement on Wednesday afternoon.
Econ Data / Events
Weaker PMI across the board in Europe (details in the AM update HERE)
Markit Services PMI 47.0 vs 52.6 f’cast, 52.7 prev
Market Movement Recap
10:48 AM Big gains overnight concurrent with Eurozone PMI data. Additional gains at 9:45am following US PMI data. Small pullback since then, but MBS still up almost 3/8ths and 10yr down almost 10bps at 2.785.
02:15 PM Modest weakness in Treasuries since 1pm. Slightly sharper weakness in MBS–still up more than an eighth on the day, but down more than a quarter point from the highs. No underlying reasons apart from pre-weekend positioning.
04:53 PM That’s a wrap. MBS sold off a bit in the 2pm hour but recovered most of the losses to head out with a quarter point gain on the day. 10yr yields are heading out near lows, down 13bps at 2.752.