Bonds sold off mid-morning after starting off relatively flat. The economic data argued against bond selling, so it fell to a B-list of unlikely suspects to explain the move. While it ultimately could be as simple as "no buyers ahead of Friday's jobs report," we can also consider some hawkish Fed comments, corporate bond issuance, and a few big block trades as motivating factors. In the bigger picture, it just looks like bonds have confirmed the boundaries of their range-finding expedition following last week's UK debt drama. It now falls to econ data to raise any potential challenges to this range. Friday's jobs report will be a good start, but next week's CPI is even more potent.
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- ISM Services PMI
- 56.7 vs 56.0 f'cast
- Biz activity
- 59.1 vs 60.9 prev
- Employment Index
- 53.0 vs 50.2 prev
- highest since March
- ADP Employment
- +208k vs. +200k f'cast
- ISM Services PMI
slightly weaker overnight with some recovery after challenger job cut report. 10yr up 1.4bps and MBS down an eighth, both well within yesterday's trading ranges.
Weakness after 9:45am for a variety of relatively unsatisfying reasons (corp issuance, Fed comments, block trades, underwhelming BOE bond buying operation, technical breakout in US and EU yields). 10yr up 6.3 bps and MBS down 3/8ths.
Bit of a recovery after 11am, but stalling in the PM hours. MBS still down 3/8ths and 10yr yields up 4.5bs at 3.799%
Back at the lows of the day in MBS, down 18 ticks (.56) in 5.0 coupons. 10yr yields are up 6.5bps on the day at 3.82%. No new news of note.
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