Bonds started out in stronger territory today, thanks to geopolitical risks stemming from European immigration issues.  When domestic traders got in for the day, Treasuries and MBS began losing ground.  Friday afternoon's closing levels were eclipsed around mid-day and bonds drifted into just slightly weaker territory by the close.

The stronger ISM Manufacturing numbers were definitely a consideration for bond sellers.  Up until that data came out, it wasn't abundantly clear that bonds were destined to end in the red zone.  That said, the weakness was definitely intact before the data came out, and the afternoon weakness was clearly not connected to the data.

All of the above suggests "new month" trading played a role.  This has to do with money managers (and other traders who'd been forced to hold a certain mix of bonds through the end of the previous month) suddenly being able to set up the new month's trades with more freedom.  That's not to suggest that July is destined to be all about rates moving higher.  That's just the way the ball bounced today.  The effects of the imbalance of bond sellers were amplified by the light volume and liquidity (Summertime Monday, holiday week, etc).  We likely won't see traders' hands until the last 2 days of the week.


MBS Pricing Snapshot
Pricing shown below is delayed, please note the timestamp at the bottom. Real time pricing is available via MBS Live.
MBS
FNMA 4.0
101-25 : -0-05
Treasuries
10 YR
2.8711 : +0.0201
Pricing as of 7/2/18 5:32PMEST

Today's Reprice Alerts and Updates
A recap of Alerts and Updates provided to MBS Live subscribers.
1:35PM  :  ALERT ISSUED: Reprices Becoming Likely
10:47AM  :  ALERT ISSUED: Negative Reprice Risk Increasing
10:09AM  :  ALERT ISSUED: Losing More Ground after ISM; Reprice Risk Gray Area

Economic Calendar
Time Event Period Actual Forecast Prior
Monday, Jul 02
10:00 ISM Manufacturing PMI * Jun 60.2 58.4 58.7
10:00 Construction spending (%)* May +0.4 0.5 1.8
Tuesday, Jul 03
9:45 ISM-New York index * Jun 782.5
10:00 Factory orders mm (%) May 0.0 -0.8