Bonds came away from this morning's economic data with a tailwind that helped turn losses into gains. The ISM Services PMI was the biggest contributor. In addition to headline PMI being much weaker than expected, the employment index was also lower than last month, and the price index was unchanged. The only thing bonds had left to fear on the day was Powell's afternoon Q&A, but there were no surprises and, thus, no reaction in rates. Lenders were free to reprice for the better if they hadn't done so before Powell. Despite the gains, trading levels continue hitting the same resistance marked by 10yr Treasury yields just under 4.20%.
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- ADP Employment
- 146k vs 150k f'cast, 233k prev
- S&P Services PMI
- 56.1 vs 57.0 f'cast, 55.0 prev
- ISM Services
- 52.1 vs 55.5 f'cast, 56.0 prev
- ADP Employment
Moderately weaker overnight and little-changed after ADP data. MBS down 6 ticks (.19) and 10yr up 5bps at 4.273
MBS up to "unchanged" after the ISM data. 10yr up 1.6bps at 4.24. MBS outperforming due to strength in the short end of the yield curve (i.e. 2yr yields are down 0.8bps on the day).
stronger still... MBS up an eighth and 10yr down 2.8bps at 4.196
Steady near best levels. MBS up 5 ticks (.16) and 10yr down 4.1bps at 4.183
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