The overnight session ushered trading levels into just slightly weaker territory in the first part of the domestic session. In other words, this morning's lower prices were a linear extension of yesterday's trend, but were stopped short by the weaker economic data.
That reversal process took some doing, however. The weaker ADP numbers at 8:15am only seemed to slow down the selling momentum--at best, deflecting it toward a more sideways path, but certainly not reversing it. Even after the weakest ISM Services PMI since 2010, bond markets still weren't eager to stampede into positive territory.
The rally eventually happened, but it took about 30 minutes of tentative 2-way trading to make it happen. Even then, Treasuries have been very clear in their efforts to go now lower in yield than 'unchanged' levels around 2.69. MBS managed a few ticks of improvement, but have been limited to 1-2 ticks in the afternoon hours. This was enough of a gap from morning rate sheet print times to justify positive reprices for several lenders.
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