It May Have Seemed Like a Bad Day, But…

Ever since topping out last Thursday morning, bonds have been steadily recovering.  Each subsequent trading day has seen lower closing yields with yesterday’s roughly matching NFP Friday’s, also incidentally the lower end of the prevailing range at 3.80%.  Whether it was a range-bound bounce or the result of decent economic data, bonds respected the range and moved several bps higher today.  It may have seemed a bit overdone at times, but consider the closing levels under 3.86% in a 3.8-4.0 range.  Volatility risks increase on Friday with Powell’s Jackson Hole appearance.  Drama is not guaranteed, but there’s a chance the market walks away with increased clarity regarding the Fed’s play book for early September data and the size of the rate cut.

Econ Data / Events

Jobless Claims

232k vs 230k f’cast, 227k prev

Continued Claims

1863k vs 1870k f’cast, 1859k prev

S&P Services PMI

55.2 vs 54 f’cast, 55.0 prev

S&P Manufacturing PMI

48.0 vs 49.6 f’cast, prev

Market Movement Recap

08:40 AM Modestly weaker overnight with no major change after claims data.  MBS down an eighth and 10yr up 3.7bps at 3.838.

09:48 AM Small recovery into 9am hour, but now a bit weaker after PMI Data.  MBS back down an eighth and 10yr up 3.6bps at 3.838.

02:30 PM Bouncing back a bit from the weakest levels of the day.  MBS down 7 ticks (.22).  10yr up 5.7bps at 3.858.