10yr yields moved down to 3.2936 and FNCL 4.5's improved another tick to 102-28 after the 10am econ data failed to show significant improvements over previous readings or versus consensus estimates. Both MBS and TSYs are with a tick of unchanged on the day. There's no further economic data today and volume is still quite low.

* ISM REPORT ON U.S. MANUFACTURING SHOWS PMI AT 60.4 IN APRIL (CONSENSUS 60.0) VS 61.2 IN MARCH * ISM U.S. MANUFACTURING PRICES PAID INDEX 85.5 IN APRIL (CONSENSUS 83.0) VS 85.0 IN MARCH * ISM U.S. MANUFACTURING EMPLOYMENT INDEX 62.7 IN APRIL VS 63.0 IN MARCH

* US MARCH CONSTRUCTION SPENDING +1.4 PCT (CONSENSUS +0.4 PCT) TO $768.9 BLN VS FEB -2.4 PCT (PREV -1.4 PCT) * US MARCH PRIVATE CONSTRUCTION SPENDING +2.2 PCT, PUBLIC SPENDING +0.1 PCT

The S&P opened at 1369.25 and rapidly fell to 1366.70. There hasn't been a major response from TSYs or MBS, but both remain near their best levels of the day. 10yr notes are currently fighting resistance at 3.299/3.301 and FNCL 4.5's are now down only a tick on the day at 102-28. Despite being slightly in the red on MBS this morning, several lenders are out with pricing that's microscopically better than Friday's last sheets. 10am Data is next on tap with ISM and Construction Spending.

The final results from the survey of foreign portfolio holdings of U.S. securities at end-June 2010 were released on 4/29. The survey measured foreign holdings of U.S. securities as of June 30, 2010, to be $10,691 billion, with $2,814 billion held in U.S. equities, $6,921 billion in U.S. long-term debt securities1 (of which $1,159 billion are holdings of asset-backed securities (ABS) 2 and $5,763 billion are holdings of non-ABS securities), and $956 billion held in U.S. short-term debt securities. The previous survey, conducted as of June 30, 2009, measured total foreign holdings of U.S. securities at $9,641 billion, with holdings of $2,252 billion in U.S. equities, $6,240 billion in U.S. long-term debt securities, and $1,149 billion in U.S. short-term debt securities (see Table 1). 1. Long-term debt securities have an original term-to-maturity of over one year. 2. Asset-backed securities are backed by pools of assets, such as pools of residential home mortgages or credit card receivables, which give the security owners claims against the cash flows generated by the underlying assets. Unlike most other debt securities, these securities generally repay both principal and interest on a regular basis, reducing the principal outstanding with each payment cycle.

(Reuters) - A fall in the risk premium for commodity markets on the death of Osama bin Laden will be short lived, with gold and oil in focus on new concerns that al Qaeda may seek retribution by attacking high-profile targets and fuel unrest in the Middle East. "The markets will always react quickly, and in this case it is someone who has been held out as the father of all terrorism," said commodities and mining analyst David Lennox of Fat Prophets in Sydney. "But any easing we might see in oil or gold markets, in my view, will be short lived. The longer-term impact will not be substantial." Investors noted al Qaeda has had years to mount a major attack against an oil terminal or refinery. But security forces in key oil producing nations have so far prevented that. Most attacks against U.S. interests have been by a Yemeni affiliate, al Qaeda in the Arabian Peninsula (AQAP). The group has claimed responsibility for trying in October to send bombs packed in toner cartridges aboard cargo planes bound for the United States. They were intercepted and failed to detonate. AQAP also backed an attempt on Christmas Day 2009 by a Nigerian man who tried but failed to detonate a bomb hidden in his underwear while aboard a U.S. commercial flight as it approached Detroit from Amsterdam. The closest al Qaeda has been to hitting the oil industry was on February 24, 2006, when Saudi forces repelled a suicide attack on the Abqaiq oil-processing center, the world's largest. "Over the last ten years, al-Qaeda has substantially weakened," said Ben Westmore, commodities economist at the National Australia Bank. "I don't think they will be successful at carrying out an attack on an oil facility." (By Nick Trevethan. Additional reporting by Rujun Shen and Alejandro Barbajosa in SINGAPORE, and Siddesh Mayenkar in MUMBAI)

Stocks futures rallied and Treasuries weakened last night following news of Bin Laden's death. S&P futures got as high as 1372.50, but have already fallen to 1366, highlighting the fairly inconsequential market impact this event should ultimately have. 10yr yields are currently just over 2 bps higher at 3.121. MBS are doing slightly better. After putting in their highest closing mark (by half a tick!) of 2011, FNCL 4.5's are down 2 ticks at 102-27. The first scheduled economic data today comes in the form of Construction Spending and ISM Manufacturing, both at 10:00am. The Fed will be buying in the 8-10 year range, around 7 billion. The ongoing Fed coupon passes in addition to the supportive aspects of month-end combine to form the inherently bullish factors this week for the bond market. That bullishness will do battle with the technical picture, which, at the moment suggests a moderation higher in yield to form a range trade ahead of NFP.