Bonds Settle Sideways After Volatile Morning
The overnight session took bonds to stronger levels with 10yr yields as much as 4bps lower (1.74) at 7:30am. Sellers jumped on those levels as the domestic session began. Yields jumped fairly quickly to 1.82%. That's a good amount of volatility for the space of a few hours, but there were a few accelerants in today's case.
Fed MBS Buying 10am, 11:30am, 1pm
ISM Manufacturing...... 57.6 vs 57.5 f'cast, 58.8 prev
ISM Prices Paid ...........76.1 vs 68.1 f'cast, 68.2 prev
Muted during Asian hours with China out on holiday. Volatility and gains in European hours, bringing 10yr yields down 4bps by the open. Weakness since then, especially after Harker's comments. MBS down an eighth and 10yr yields back up to unchanged before recovering half a bp just now.
Some follow through selling after hotter inflation component of ISM data, but leveling off now. MBS were down as much as a quarter point, but have bounced back by about an eighth.
Sideways and uneventful for most of the PM hours. Slight weakness between 1pm and 4pm ET, but not enough to challenge the intraday range. MBS down 2 ticks (0.06) on the day at 102-02 (102.06). 10yr is up just under 1bp on the day at 1.791.