Ceiling Looking Too Low After ISM Data Reaction

Yields may have failed to break below a floor of 2.72% last week, but they still had a chance to hold a ceiling of 2.88% this week.  At least, they HAD that chance until today's ISM Manufacturing data.  Bonds sold off quickly after that, with 10yr yields topping out at 2.951.  Fed Funds Futures (and the stock sell-off, for that matter) suggested the market viewed the data as fresh evidence that the Fed needed to remain aggressive in removing policy accommodation. 

Econ Data / Events

  • Fed MBS Buying 10am, 11:30am, 1pm

  • ISM Manufacturing.... 56.1 vs 54.5 f'cast, 55.4 prev
    ISM Prices Paid .........82.2 vs 83.0 f'cast, 84.6 prev

Market Movement Recap
08:33 AM

Slightly weaker at the start of the overnight session and again at the start of the European session, but mostly sideways after that.  10yr up 2.9bps at 2.88 and 4.0 UMBS down just over an eighth of a point.

10:26 AM

Heavy selling after ISM Manufacturing data.  10yr up almost 8bps to 2.926 and MBS down almost half a point on the day.

04:08 PM

Sideways stability in the PM hours, but much of the day's weakness remains intact.  10yr yields up 7.3bps at 2.922 and MBS down just over 3/8ths of a point.