Is The Rally Meeting Resistance or Just Consolidation?

With modest overnight weakness and a small negative reaction to this morning's headlines (ADP and Treasury issuance), bonds may be encountering some more resistance on their journey toward lower yields and higher prices.  Is this a meaningful signal or just incidental consolidation? 

Econ Data / Events

  • 20min of Fed 30yr UMBS Buying 10am, 1130am (M-F) and 1pm (T-Th)

  • ADP Employment 167k vs 1.500m f'cast, 4.314m prev

  • ISM Services 58.1 vs 55.0 f'cast, 57.1 prev

Market Movement Recap
08:37 AM

10yr yields aren't panicking, but they're up roughly 3.5bps on the day at .546 after a strong ADP revision and big increase to Treasury issuance.  As expected, MBS are outperforming amid general bond market weakness with 2.0 coupons down only 3 ticks (0.09) at 103-20 (103.625).

10:26 AM

Modest weakness after super strong ISM data (not necessarily because of it).  MBS and Treasuries at weakest levels but not panicking.  10yr = .5477%,  UMBS 2.0 down 0.09 on the day (3 ticks).

04:01 PM

General malaise (or insignificant consolidation of the previous rally?) continues as MBS hit their lows (down almost a quarter point).  10yr yields are sideways near their higher levels of the day.