MBS MID-DAY: Data Mattered More Today, and It Was Positive For Bonds

Granted the day is not over yet, but at this point, a full-scale reversal of the morning's momentum is unlikely.  As expected, with month-end out of the way, economic data has a bigger impact--especially when it's something like ADP Employment that has a relevant bearing on Friday's NFP.  ADP turned out to be much weaker than expected this morning (189k vs 225k forecast). It was the weakest report in over a year and was joined shortly thereafter by the weakest ISM Manufacturing report since May 2013.  The employment component of the ISM data was also weaker.

Bond markets took that information and ran with it, right to the previous low of 1.852 in 10yr yields.  That's now the most relevant resistance level in play, and right in the middle of long-standing inflection zone from 1.84-1.86

Fannie 3.0s aren't quite keeping pace today, evening the score a bit after outperforming earlier this week.  Relative to March 24-25th, prices are technically a few ticks higher, but not when accounting for the effects of the roll.  Even so, lenders have passed on a good amount of gains, and rates are getting very close to the lows from the beginning of last week.