Tame ISM Data Makes for Short-Lived Bond Market Strength, Hard-Fought Gains
To be fair to the prospects for "bond market strength," we haven't really given it much time to develop. That said, the initial reaction to ISM data has been underwhelming at best, and potentially reversing at worst. First a run-down on the data:
- June ISM Purchasing Managers Index 55.3 vs 55.8 forecast, 55.4 previously
- Prices paid 58.0 vs 60.3 forecast
- Employment 52.8 vs 53.2 forecast
Quick thoughts: this was close enough to the forecast as to not hold any profound commentary on the state of the economy. Unfortunately, the intact trend for ISM has been that "parabolic bounce back" from this morning's Day Ahead. This keeps that intact, so could be seen as a net negative for bond markets in that light.
The first reaction for Treasuries and MBS was a modest move toward better levels. Shortly thereafter, it was completely unwound. Now we're waiting to see if pre-ISM weak points will hold. So far they are, but levels are VERY close. Could still go either way here. Feels like every tick in the right direction is hard-fought.