Today's ADP employment data missed the mark by quite a bit. If there was one reason that bonds were able to move back into positive territory after overnight weakness, that was it. The gains didn't last long thanks to a combination of EU bond market weakness and general tradeflows at the NYSE open. In fairness, the gains returned by the end of the day, but just barely. The takeaway in the bigger picture is that bonds are consolidating and waiting for more relevant inspiration.
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Fed MBS Buying 10am, 1130am, 1pm
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ADP Employment 374k vs 613k f'cast, 326k prev
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ISM Manufacturing 59.9 vs 58.6 f'cast
Prices Paid 79.4 vs 83.8 f'cast
Bonds were moderately weaker in the first few hours of the overnight session but bounced back just a bit since then. The weaker ADP data helped, and bonds just now hit 'unchanged' levels on the day.
Back into negative territory now as the data-driven rally stalled out when 10yr yields hit 1.284%. European bond weakness remains a drag on US bonds. 10yr up .3bps at 1.31% and MBS are down 2 ticks (0.06).
Bonds found their footing shortly after the last update and have been sideways ever since. Reprice activity has been minimal, to say the least. 2.0 UMBS down only 1 tick at 101-10 (101.31) and 10yr yield down .7bps at 1.30%.
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