Feel Free to Enjoy The Rally, But Don’t Read Too Much Into It

Bonds improved somewhat significantly in overnight trading and continued into stronger territory through 10:20am ET.  This morning’s Chicago PMI data was weak enough to deserve consideration as a catalyst for bond buying except for the fact that yields were already 8bps lower by the time the data came out.  To be fair, it did help the rally extend just a bit. After that, the rest of the day was remarkably flat with trading levels right in line with those seen at the very beginning of the previous week.  In other words, today’s gains are “nice,” but they are just a byproduct of the bond market working through the typical end of year illiquidity.  

Econ Data / Events

Chicago PMI

36.9 vs 42.5 f’cast, 40.2 prev

Market Movement Recap

09:49 AM Slightly stronger overnight. More buying early.  MBS up 10 ticks (.31) and 10yr down 8bps at 4.549

01:51 PM Little changed from AM levels.  MBS up 11 ticks (.34) and 10yr down 8bps at 4.549

03:47 PM Effectively unchanged from the last update.  MBS up 10 ticks (.31) and 10yr down 8.2bps at 4.545