Today's recap could just as easily be this morning's commentary. Little changes after the initial rout that took Treasuries and MBS to their weakest levels since the middle of June. As for culprits, there's a short list. First and foremost, an overwhelming slate of corporate bond issuance is getting the most attention. ISM Services data didn't help and it certainly argues against the Fed pausing to consider the ill effects of policy tightening any time soon. On that note, traders may be bracing for a few days of Fed speeches followed by another pre-meeting blackout period that traverses another CPI report (next week).
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- ISM Non Manufacturing
- Headline: 56.9 vs 55.1 f'cast, 56.7 prev
- Biz activity: 60.9 vs 57.0 f'cast, 59.9 prev
- Price 71.5 vs 72.3 prev
- ISM Non Manufacturing
moderately to sharply weaker overnight with 10yr yields up 6.3bps at MBS down roughly 3/8ths of a point. Stocks are up more than half a percent, confounding the notion that market is trading the Fed accommodation outlook.
Additional weakness heading into mid-day with 10yr yields up 15bps to 3.347 and MBS down 3/4ths of a point. Corporate issuance and 9:30am NYSE open tradeflows contributed to the move.
Flat all afternoon (which seems to be a better than average bet after big moves in the AM or overnight). MBS right in line with previous levels. 10yr yields down a hair, now up "only" 13.5bps at 3.33%.
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