Rally Accelerates After Weak PMI Data. Fed Coming Up Next Week

Eurozone PMI data was much weaker in the overnight session, leading to a big rally in bonds at home and abroad.  10yr yields were thus able to walk in the door down several bps, trading just over 2.80% after being nearly 30bps higher yesterday morning.  Weaker non-manufacturing PMI in the U.S. only added to the gains at 9:45am.  Bonds held most of those gains by the end of the trading day.  Next week’s headliner is the Fed Announcement on Wednesday afternoon.

Econ Data / Events

Weaker PMI across the board in Europe (details in the AM update HERE)

Markit Services PMI 47.0 vs 52.6 f’cast, 52.7 prev

Market Movement Recap

10:48 AM Big gains overnight concurrent with Eurozone PMI data.  Additional gains at 9:45am following US PMI data.  Small pullback since then, but MBS still up almost 3/8ths and 10yr down almost 10bps at 2.785.

02:15 PM Modest weakness in Treasuries since 1pm.  Slightly sharper weakness in MBS–still up more than an eighth on the day, but down more than a quarter point from the highs.  No underlying reasons apart from pre-weekend positioning.

04:53 PM That’s a wrap.  MBS sold off a bit in the 2pm hour but recovered most of the losses to head out with a quarter point gain on the day.  10yr yields are heading out near lows, down 13bps at 2.752.