Coming into this week, Friday's jobs report was our best chance to see a big reaction to economic data. After today, it's our only remaining chance. Today's offerings were close enough to consensus as to have minimal impact on bonds. Trading levels improved modestly, but that's all it took for MBS to nudge up to their best levels since the beginning of March.
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Fed MBS Buying 10am, 1130am, 1pm
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ADP Employment 742k vs 800k f'cast, 565k prev
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ISM Non-Manufacturing 62.7 vs 64.3 f'cast, 63.7 prev
Modestly weaker overnight. Minimal volatility after ADP miss (742k vs 800k). Yields dropped at first, but now back in line with pre-ADP levels with 10yr up 2 bps vs yesterday at 1.61% and 2.5 UMBS down 2 ticks (.06) at 103-24 (103.75).
Bonds turning green now as stocks fall at the 9:30am NYSE Open. Fed's Evans was out with bond-friendly comments at the same time (as was an ECB speaker). Fairly light volume on the move. Hard to say if it's central bank speakers or 9:30am tradeflows.
ho-hum ISM data. No major reaction. Stocks falling more (S&P futures just returned to unchanged). Bonds still near unchanged.
Very uneventful day so far. Little-changed from previous update but holding near the best levels. 10yr yields just barely lower at 1.587 and 2.5 UMBS up 1 tick (0.03) at 103-26 (103.81).
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