Bonds started out sharply stronger today after Trump walked back previous comments on Fed Chair Powell. Headlines regarding lower tariffs for China also helped, but they helped stocks more. The good times began unravelling with the 9:45am S&P PMI data. Both manufacturing and services PMIs showed sharp increases in prices. This is one of the first clear examples of tariffs impacting inflation data. Markets were quite willing to trade the data this time (unlike with the recent CPI/PPI releases--probably because those showed lower inflation in a world that feared higher inflation) with bonds ultimately almost fully erasing the AM gains.
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- S&P Global Services PMI
- 51.4 vs 52.5 f'cast, 54.4 prev
- S&P Global Manufacturing PMI
- 50.7 vs 49.1 f'cast, 50.2 prev
- S&P Global Services PMI
Sharply stronger overnight on Trump's reversal on Powell/China. MBS up nearly half a point and 10yr down 9bps at 4.304
Losing some ground as bonds react to inflation implications in PMI data. MBS still up 3/8ths, but down a quarter point from highs. 10yr down 5.8bps at 4.338 but up 7bps from lows.
More selling, but finding some support. MBS still up an eighth on the day and 10yr down 1.7bps at 4.38
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