Rally Accelerates After Weak PMI Data. Fed Coming Up Next Week
Eurozone PMI data was much weaker in the overnight session, leading to a big rally in bonds at home and abroad. 10yr yields were thus able to walk in the door down several bps, trading just over 2.80% after being nearly 30bps higher yesterday morning. Weaker non-manufacturing PMI in the U.S. only added to the gains at 9:45am. Bonds held most of those gains by the end of the trading day. Next week's headliner is the Fed Announcement on Wednesday afternoon.
Weaker PMI across the board in Europe (details in the AM update HERE)
Markit Services PMI 47.0 vs 52.6 f'cast, 52.7 prev
Big gains overnight concurrent with Eurozone PMI data. Additional gains at 9:45am following US PMI data. Small pullback since then, but MBS still up almost 3/8ths and 10yr down almost 10bps at 2.785.
Modest weakness in Treasuries since 1pm. Slightly sharper weakness in MBS--still up more than an eighth on the day, but down more than a quarter point from the highs. No underlying reasons apart from pre-weekend positioning.
That's a wrap. MBS sold off a bit in the 2pm hour but recovered most of the losses to head out with a quarter point gain on the day. 10yr yields are heading out near lows, down 13bps at 2.752.