Bonds Start Strong and Finish Stronger Despite Decent Data

Today's trading action flew in the face of the prevailing reaction function for the bond market.  Specifically, an important economic report was stronger than expected, but bonds rallied nonetheless.  Today's video offers a few thoughts to help reconcile the anomaly (spoiler alert: bonds did sell after the data, but had other reasons to move in the other direction for most of the rest of the day.  Data ended up being a speedbump for a recovery that happened for other reasons).  

Econ Data / Events
    • ISM Non-Manufacturing
      • headline 55.1 vs 54.5 f'cast, 55.2 prev
      • prices 65.6 vs 67.8 prev
      • jobs 54.0 vs 50.0 prev
Market Movement Recap
09:18 AM

Nice rally overnight on technical support and weaker data in Europe.  MBS up 10 ticks (.31) and 10yr down 7.7bps at 3.985.

10:05 AM

Weaker after ISM data but still positive on the day.  MBS up 3 ticks (.09) but down a quarter point from highs and 10yr down 3.7bps but up 5bps from lows at 4.024.

01:15 PM

Bonds battling back to best levels of the day now.  10yr down 9bps at 3.971.  MBS up 3/8ths of a point.

04:30 PM

Resilience/recovery continues into the close.  MBS up almost half a point.  10yr yield down 10.2bps at 3.96.