Explaining Today's Inexplicable Weakness

If the bond market is well understood to be heavily "data dependent," and if today's big ticket economic data didn't come in stronger than expected, why did the bond market lose a fair amount of ground?  A fair question, to be sure and in this case one that isn't easily answered by making excuses for the econ data (i.e. by calling attention to the month-over-month increase in ISM and ISM prices, or saying "yeah, but JOLTS is still elevated!"). Instead, it makes more sense to focus on "new month" tradeflows and apprehension over the upcoming data and event in the 2nd half of the week (Treasury refunding announcement + bigger-ticket econ data).

Econ Data / Events
    • ISM manufacturing
      • 46.4 vs 46.8 f'cast, 46.0 prev
      • prices 42.6 vs 42.8 f'cast, 41.8 prev
    • Job Openings
      • 9.582m vs 9.610m f'cast, 9.616m prev
Market Movement Recap
09:22 AM

Modestly weaker overnight with more selling at 8:20am. Stabilizing now.  MBS down 1 tick (0.03) officially, but more like a quarter point from y'day's latest liquid levels.  10yr up 5.4bps at 4.021.

10:17 AM

More selling despite weaker data (not weak enough, apparently). 10yr up 7.4bps at 4.04.  MBS down half a point.

03:20 PM

Sideways at weaker levels since the last update.  MBS down 14 ticks (.44).  10yr up 7.6bps at 4.043