ISM and ADP Join The Chorus

Apart from Friday's jobs report, this morning's ISM Services (or "non-manufacturing") data was the week's most relevant market mover in terms of scheduled data.  Like the ISM Manufacturing  PMI and yesterday's JOLTS, the services PMI conveyed a slower growth message--one that increasingly argues in favor of the Fed's March rate hike being the last of this cycle.  But bonds have been a bit more reluctant to celebrate today compared to the past two days.  

And the same chart with annotations for the market movers:

It could be that longer-term bonds increasingly feel like they're in a good position to digest Friday's jobs report and next week's CPI.  After all, these are the lowest yields in 6 months and if those reports come in weaker, yields will need to go lower still.  

In addition to the rally potentially feeling like it's "done enough for now," we can also consider that the short end of the yield curve is the first place that bonds will show a reaction to data with the power to influence the Fed.  That's why 2yr yields are down twice as much as 10s today.  2s are much more closely related to the Fed Funds Rate and the Fed Funds Rate is now seen holding steady at the next meeting (and dropping 75bps by the end of the year).

Bottom line: we were waiting for economic data to resolve some uncertainty in the wake of the banking drama.  So far, that data has been unified in pointing toward recession.