Bonds Brace For Impact From Data

Bonds sold off somewhat abruptly on Wednesday with little by way of overt justification.  While it's true that the Fed released the Minutes of its most recent meeting (3 weeks ago), there were no revelations and no new ways to think about the points that have been hammered home ad nauseum in recent weeks.  Perhaps more important is the fact that the sell-off was largely over by the time the Fed Minutes came out.  Were traders bracing for impact?  It's actually easier to imagine that sort of trepidation in advance of the next two days of economic data.  After all, we know the Fed wants to resume its rate hikes if the economy evolves as expected and Thu/Fri data can do quite a lot to let us know how the economy is evolving. 

Econ Data / Events
    • ISM Manufacturing: 46.0 (exp 47.2; prev 46.9)
      - Prices Paid: 41.8 (exp 44.0; prev 44.2)
      - Employment: 48.1 (prev 51.4)
      - New Orders: 45.6 (prev 42.6)
Market Movement Recap
09:22 AM

Boringly flat in the overnight session. Losing some ground now with 10yr yield up 1.8bps at 3.878.  MBS still up 2 ticks (.06) in 5.5 coupons

01:41 PM

Weaker into the PM hours with US Treasuries leading the way.  10yr up 7.4bps at 3.934.  MBS down only 6 ticks (.19) on the day, but more than a quarter point from the highs.

02:20 PM

Additional weakness after Fed Minutes, but not necessarily because of them.  MBS down 3/8ths.  10yr up almost 9bps at 3.945.

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