Bonds Hold Ground Despite Unfriendly Econ Data

If there was a prime directive for the bond market last week, it was to sell off regardless of any counterargument from the economic data.  The new week got off to a distinctly different start with stronger economic data only causing a temporary inconvenience for bonds.  Both MBS and Treasuries were pushed back in line with Friday’s weakest level, but both found support in the PM hours before going on to make it back to unchanged territory, or close to it.  Volume was low and the volatility was small in the bigger picture, but at the very least, it was nice to see a different reaction than last week’s default weakness. 

Econ Data / Events

NY Fed Manufacturing

.20 vs 12 f’cast, 31.2 prev

S&P Services PMI

58.5 vs 55.7 f’cast, 56.1 prev

Market Movement Recap

09:46 AM Modestly stronger overnight, but giving up gains in domestic trading.  MBS up 2 ticks and 10yr down less than 1 bp at 4.385

12:15 PM Trying to bounce after hitting weakest levels.  MBS down 1 tick (.03) and 10yr up 0.7bps at 4.399

03:28 PM Off the weakest level.  MBS unchanged and 10yr 0.2bps higher at 4.394