Was it "new month" trading?  Or was it a reaction to abysmal sales data from GM?  Does it matter if the net effect was a nice move lower for rates?

Yes and no...

This morning's market movement was tricky business because the GM news happened right at the 9:30am NYSE open.  Being the first day of a new month, we may well expect some tradeflow volatility at the opening/closing bells.  In other words, bond ETF trading at the NYSE open could have contributed to the nice rally this morning.  

To be sure though, the GM sales data caught the market's attention.  Sales weren't just lower, they were 15% lower versus already downbeat forecasts calling for an 8% drop.  Moreover, inventory numbers moved to the highest levels since 2009 (104 days compared to an average day count that's roughly 60-70 days).  

GM's stock led the charge lower for multiple "risk-off" indicators.  Bonds reacted a bit more than most because traders who recently bet against lower rates were suddenly confronted with levels that forced them to cover their bets (by buying bonds).  This created a moderate snowball buying spree that took yields below the 2.28% technical level, ultimately leveling off around 2.26 and trickling down to 2.25+ by the close.  Fannie 3.5 MBS picked up nearly a quarter of a point.

MBS Pricing Snapshot
Pricing shown below is delayed, please note the timestamp at the bottom. Real time pricing is available via MBS Live.
FNMA 3.5
103-05 : +0-07
10 YR
2.2514 : -0.0406
Pricing as of 8/1/17 4:27PMEST

Today's Reprice Alerts and Updates
A recap of Alerts and Updates provided to MBS Live subscribers.
10:18AM  :  Bonds Cool Off After Stronger ISM Prices, But Not Reversing Course
9:59AM  :  Bonds Surge Back Into Positive Territory at NYSE Open
8:42AM  :  No Help From PCE Data; Core Annual PCE Ticks Up

MBS Live Chat Highlights
A recap of featured comments from the Live Discussion on the MBS Live Dashboard.
Paul Philbin  :  "Someone the other day had a question about student loans and using the IBR payment of $0. Apparently the new DU update yesterday will - DU will also now be able to recognize a student loan that is in repayment with an Income Based Repayment and it will accept a payment of $0 if the actual IBR payment is $0."
Christopher Stevens  :  "2nd leg down in to the close"
B C  :  "so normal day"
Nathan Miller  :  "guess my secondary needs to see 7-10tks before they give up some love, still sitting on yesterdays rates"

Economic Calendar
Time Event Period Actual Forecast Prior
Tuesday, Aug 01
8:30 Consumption, adjusted mm (%)* Jun +0.1 0.1 0.1
8:30 Personal income mm (%) Jun 0.0 0.4 0.4
8:30 Core PCE price index yy (%) Jun +1.5 1.4
10:00 ISM Manufacturing PMI * Jul 56.3 56.5 57.8
10:00 ISM Mfg Prices Paid * Jul 62.0 55.5 55.0
10:00 Construction spending (%)* Jun -1.3 0.4 0.0