Holding Ground Despite Slightly Stronger ISM Manufacturing Data
Bond markets were already coping with weakness ahead of the 10am release of the ISM Manufacturing PMI--the most significant piece of data this morning. The report came in stronger than expected at the headline level, but there were a few mitigating factors.
- PMI 53.2 vs 52.0 forecast, 51.3 previously
- Employment Index unchanged at 52.3
- Production Index 48.2, first time below 50 since May 2009
- New Orders 54.5 vs 51.2 previously
The unchanged employment component helps bond markets hold ground this week, with NFP coming up on Friday and of course, the production index being at 5-year lows is a major counterpoint to the stronger headline (but probably the component most-impacted by the weather).
Rather than look at any of the counterpoints in the reports component indices, it's perhaps most useful to simply look at the headline reading. It's relationship to previous results isn't exactly confidence inspiring.
MBS are 2 ticks off the lows seen heading into the data and Treasuries have recovered as well (still following stocks).