Weaker Start on Data and Fed Anxiety
Bonds got off to a weaker start in the new week on a variety of factors. Over the weekend, a few Fed pundits shared more hawkish outlooks, including the WSJ, which pointed out that a 50bp Fed hike could be offset by the higher terminal rate in the dots. Markets already heard the Fed say the same, but in the absence of other news, maybe it mattered. Or maybe the easing of China’s covid restrictions was the bigger story adding slight pressure to bonds heading into the domestic session. Either way, it was stronger ISM data that did the most damage, touching off a selling spree that took MBS roughly 3/4ths of a point lower and 10yr yields more than 11bps higher by the 3pm CME close.
Econ Data / Events
ISM Non Manufacturing
56.5 vs 53.3 f’cast, 54.4 prev
ISM Prices Paid
70.0 vs 70.74 prev
Market Movement Recap
08:47 AM Slightly weaker to start the overnight session and mostly flat since then. 10yr up 5.5 bps at 3.546. MBS down a quarter point.
09:40 AM Losing a bit more ground after a few corporate bond announcements. MBS down 3/8ths and 10yr up 6.6bps at 3.557.
10:03 AM Additional weakness after stronger ISM data. 10yr up 9.9bps at 3.59. MBS down over half a point.
01:39 PM Sideways to slightly weaker since ISM data. MBS down almost 3/4ths. 10yr up just over 10bps at 3.594.
03:18 PM 10yr in line with weakest levels at 3pm CME close, up 11.7bps at 3.608. MBS still down 3/4ths of a point.