Post Fed Correction Leveling Off?

Based on the weakness in the bond market this morning, it looked as if the post-Fed correction that began last week was set to continue into the new week.  And while that indeed may prove to be the case, there’s some room for doubt after the close.  Bonds rallied nicely in the late AM and early PM hours with both Treasuries and MBS making it back to unchanged levels. They’ve faded a bit after that, but not nearly back to the mid-day lows.  Comments from Fed’s Goolsbee lined up with the reversal, but the volume behind the move suggests that may not have been the primary motivation.  In any event, the milder weakness builds a case for the post-Fed correction potentially leveling off.  Tuesday will be more telling in that regard.

Econ Data / Events

S&P Services PMI

55.4 vs 55.3 f’cast, 55.7 prev

S&P Manufacturing PMI

47.0 vs 48.5 f’cast 47.9 prev

Market Movement Recap

09:55 AM Slightly weaker overnight and additional losses after PMI data.  10yr up 4bps at 3.781.  MBS down 6 ticks (.19).

02:06 PM Back to “unchanged” in MBS and nearly there in 10yr yields, currently up 0.1bps at 3.741.

03:42 PM Sideways for most of the PM hours.  MBS down 1 tick (.03) and 10yr up 0.3bps at 3.744