Even Second Tier Data is Having an Impact

Bonds began the day in roughly unchanged territory and made some gains early.  The 9:45am PMI data was the only item on the calendar and we'd consider that to be 2nd tier, at best.  It's telling, then, to see the immediacy of the reaction given the fairly modest beat on the services side (53.7 vs 51.5 f'cast, 52.6 prev).  Bonds immediately sold off, trading in a 2-3bp gain for a 2-3bp loss in 10s. 

Strikingly, in terms of the outright change in yields and the spike in volume, this often overlooked economic data is officially responsible for the biggest reaction of the week.