Debt Ceiling Finally Having an Impact

After several weeks in the news cycle spotlight, the debt ceiling is finally starting to have a visible impact on the longer-term bond market (and stocks).  The reaction function is playing out as expected with "impasse" being good for bonds and bad for stocks.  Vice versa for "resolution."  Today saw more evidence for "impasse," resulting in a bond rally and stock sell-off in the afternoon.  Debt drama aside, bonds hinted at some supportive buying earlier in the day, both before and after the stronger S&P Services PMI data.

Econ Data / Events
    • S&P Manufacturing PMI
      • 48.5 vs 49.0 f'cast, 50.2 prev
    • Services PMI
      • 55.1 vs 51.5 f'cast, 53.6 prev
Market Movement Recap
08:59 AM

Weaker overnight with 10s as high as 3.761.  Recovering a bit, now up only 1.7bps at 3.738.  MBS down just over an eighth.

12:59 PM

Best levels of the day heading into the PM hours.  10yr nearly unhanged at 3.723 and MBS down only 3 ticks (.09).

04:11 PM

Decent rally into the close.  10yr down 2bps at 3.7 and MBS up to 'unhanged' levels.