Bonds a Bit Nervous as Big Data Week Begins

If there was ever a time when economic data was inconsequential as a market mover, the post-covid era is surely a front-runner.  That said, we know this dynamic will begin to change as the temporary distortions and volatility work themselves out.  We've already seen bonds react to nonfarm payrolls a few times--even if only temporarily.  As such, we're unable to dismiss the jobs report as a non-event.  Bonds seem to be starting out the current week erring on the side of caution, in case the data reignites a bullish case for the labor market.

Econ Data / Events

  • Fed MBS Buying 10am, 1130am, 1pm

  • ISM Manufacturing 61.2 vs 60.9 f'cast, 60.7 prev

  • Construction Spending 0.2 vs 0.5 f'cast, 1.0 prev

Market Movement Recap
08:43 AM

Much weaker overnight with most of the damage happening in low-volume futures trading during Asian market hours.  Things haven't improved during European hours or early in the the domestic session for that matter.  8:20am CME open saw more volume and selling, thus suggesting a "new month" positioning move.

12:17 PM

Bonds are recovering a but as we head into the end of the European trading session (though not necessarily because of it).  10yr yields now up only 3.4 bps to 1.615% and 2.5 UMBS down less than an eighth on the day.

03:14 PM

 After rallying into the PM hours, bonds have been flat in a very narrow range.  Trading levels are the same as the last update although MBS have gained another tick (0.03) and are now down only 2 ticks (0.06) on the day.