Bond yields spiked to their highest levels in more than 8 months this morning following another upbeat ADP report. At first glance, it was a repeat of last month's ADP reaction--not something that made perfect sense given that last month's ADP didn't align well with NFP 2 days later. In today's case, the amount of weakness attributable to ADP was much smaller than last time. Instead, it was the bond market's digestion of the Treasury refunding announcement that caused issues. 10yr auction sizes were a bit higher than expected and the Treasury's buyback program was a bit lighter than expected. Longer-dated bonds took a hit while 2-3yr Treasuries actually improved.
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- ADP Employment
- 324k vs 189k f'cast, 497k prev
- ADP Employment
Modestly stronger overnight and a bit weaker after ADP. 10yr up 0.8bps at 4.045. MBS down 2 ticks (.06).
Additional weakness with 10yr up almost 6bps at 4.094. MBS down a quarter point (occasionally half a point due to illiquidity).
Nice bounce back with MBS now down only an eighth and 10yr up only 3.2bps at 4.069.
Fairly flat since the PM recovery. MBS down 7 ticks (.22) and 10yr up 3.4bps at 4.071.
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