Bonds Leading Off in a Friendly Direction

With ISM Manufacturing, Friday brought the only other reasonably important economic report of the week after Thursday's PCE data, and it did not disappoint.  Well, actually, it did disappoint anyone hoping to see strength and resilience in the sector which is why it did not disappoint those hoping to see lower rates.  Not only did the headline dip well into contractionary territory, but the employment gauge was the 2nd lowest since breaking out of the covid lockdown period in mid 2020.  Timing matters with the big jobs report looming next Friday.  Prices also decelerated slightly.  With that, bonds surged to the best levels in more than two weeks, effectively taking a lead-off before confirming a friendly range breakout.  Caveat: that confirmation requires next week's data to avoid crushing expectations.

Econ Data / Events
    • ISM Manufacturing
      • 47.8 vs 49.5 f'cast, 49.1 prev
    • ISM Prices
      • 52.5 vs 53 f'cast, 52.9 prev
    • Consumer Sentiment
      • 76.9 vs 79.6 f'cast, 79 prev
    • Inflation expectations
      • 1y up 0.1
      • 5y unchanged
Market Movement Recap
10:24 AM

slightly weaker in the early AM, but rallying nicely after 10am data.  10yr down 5.5bps at 4.197.  MBS up 5 ticks (.16).

12:38 PM

Rally accelerated into 11am and is holding gains.  10yr down 4.7bps at 4.197.  MBS up 5 ticks (.16). 

04:42 PM

Going out at the best levels of the day.  MBS up 10 ticks (.31).  10yr down 7.2bps at 4.182.