Counterintuitive Reaction to Data, But We’re Not Upset
3 Hours, 13 Min ago
The bond market did not stick to its usual script today. An important piece of economic data (ISM Services PMI) came out above the median forecast by an amount that is historically significant–an amount that would almost always result in immediate bond market weakness of at least several bps in terms of 10yr Treasury yields. Unsurprisingly, that happened right away, but then something else happened. Bonds quickly erased the losses and moved to the best levels of the day (where they stayed for the rest of the trading day). It’s a bit of a stretch to give credit to the components of the data, but it helps. Other explanations include anticipation for more palatable inflation data next week and, in the shorter-term, tame job creation in this Friday’s data.
- ADP Employment
- 152k vs 175k f’cast, 192k prev
- ADP Employment
08:17 AM
Basically unchanged overnight and little reaction to ADP jobs. MBS unchanged and 10yr down less than 1bp at 4.319
10:38 AM
Volatility after ISM data with a brief pop to 4.358 in 10yr yields, but now back down 1.5bps on the day to 4.31+. MBS back up 1 tick (.03) after being down 2 ticks (.06) at the lows.
11:24 AM
Best levels of the day now with 10yr down 3.6bps at 4.291 and MBS up 5 ticks (.16).
02:25 PM
Fairly flat near best levels. Trading levels right in line as the last update.
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