Big Losses Get Bigger After ISM Data

Bonds sold off again today, but this time in several distinct waves.  The first wave occurred instantly as trading opened in the overnight session.  10yr yields jumped immediately from 4.02 to 4.08 as investors reacted to Powell's 60 Minutes interview (which reiterated that strong econ data means the Fed is in no hurry to cut).  Stronger econ data in Europe pushed EU yields higher, kicking off the 2nd wave of selling and taking 10s to 4.12.  Then in U.S. hours, a broadly stronger ISM Services PMI kicked off the 3rd wave, taking yields over 4.16% by the 3pm CME close.  With that, bonds are basically back in line with January's highs unless you ask shorter-term bonds (more influenced by Fed Funds Rate expectations) which are the highest since the Dec 13th Fed announcement.

Market Movement Recap
09:18 AM

Sharply weaker overnight, with losses out of the gate and additional weakness in Europe.  10yr up 10bps at 4.119.  MBS down almost half a point in 5.5s and just over a quarter point in 6.0 coupons.

10:35 AM

Additional losses after ISM data.  MBS down over half a point.  10yr yield up 13.2bps at 4.154.

02:05 PM

Weakest levels just before 11:30am.  Sideways since then.  MBS down almost half a point in 5.5 coupons and 10 ticks (.31) in 6.0 coupons). 10yr up 13.8bps at 4.16%

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