We knew the onus was on weaker economic data to justify any decent drop in rates/yields and we know the first week of any given month has a high concentration of relevant reports and that today's slate is 2nd only to NFP day. Today's heavy hitters included ADP Employment and ISM Services. Both were weak--especially ADP. The employment component of the ISM report actually improved and that serves as a reminder that data doesn't always agree--especially if the sample size is a single month. If Friday's jobs report agrees with ADP, there's more room for improvement for rates. If NFP does like ISM's employment index and rises slightly from last month, bonds will likely have to give back some of today's gains. Future musings aside, it's nice to see the market is willing to do what it's supposed to do with this type of data.
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- ADP Employment
- 37k vs 115k f'cast, 62k prev
- ISM Services
- 49.9 vs 52.0 f'cast, 51.6 prev
- ISM Prices
- 68.7 vs 65.1 prev
- ISM Employment
- 50.7 vs 49.0 prev
- ADP Employment
stronger after ADP. MBS are up an eighth of a point and 10yr yields are down 4.6bps at 4.418.
Additional gains after ISM data. MBS up 10 ticks (.31) and 10yr down 8.3bps at 4.383
Giving up some ground but mostly sideways after additional gains. MBS up more than 3/8ths and 10yr down 10.3bps at 4.362