True to Form, No Major Impact from Weaker-Than-Expected ADP Data
Two important things to keep in mind when approaching this morning:
1. Markets don't care as much about ADP these days (discussed in more detail HERE)
2. Markets aren't here to see ADP this week, and if they could only pick one event, they're not even here to see NFP
The best piece of evidence for that is the last instance of NFP that crushed expectations yet somehow (read: 'thanks ECB!') still gave way to a positive day for bond markets.
Today's ADP data is another piece of evidence. At 179k versus 210k forecasts--and also in light of the 288k previous print on the last NFP--it was weak enough that, if the report mattered as much as it used to, we'd be gaining more ground than we are. Granted, that assessment may vary depending on one's own personal biases, but you decide: is a move from 2.60 to 2.58 in 10yr yields the kind of rally you'd expect on these numbers?
- ADP 179k vs 210k forecast
- Last month revised to 215k from 220k
Making it a bit tougher to pass judgment on ADP's relevance, 10yr yields are down another bp from the initial post-data pop, making it 3bps since the data, but only 2bps day-over-day (2.573 currently). Fannie 3.5s are up 6 ticks at 102-10, and International Trade is coming out right now. It's far more accomplished than ADP when it comes to reports that don't matter as much as they used to.