A Bit of Meaningless Weakness. More Important Stuff On Deck

Bonds lost ground to start the new week, but not for any compelling reasons.  If we could even make a case for the weakness being caused by something, we’d be forced to rely on unsatisfying explanations like technical corrections or a leveling off of the prevailing trend ahead of bigger-ticket data.  All that having been said, today was unequivocally a leveling-off of the prevailing trend ahead of bigger ticket data.  The focus is not so much on the 7-8bps of 10yr yield weakness on this data-free day, but rather on the 20-40bps of movement that could be seen in response to economic data and the Fed over the next 7 business days.

Econ Data / Events

Factory Orders

-3.6 vs -2.8 f’cast, +2.8 prev

Market Movement Recap

09:42 AM Moderately weaker overnight.  Treasuries unresponsive to EU bond gains.  10yr up 5.7bps at 4.266.  MBS down 10 ticks (.31).

11:23 AM Slightly weaker into 11am hour.  MBS down 10 ticks (.31) and 10yr up 7.5bps at 4.284.

12:37 PM Worst levels of the day.  10yr yields up 8.8 bps at 4.297.  MBS down 3/8ths.

02:24 PM sideways near weakest levels.  MBS down 11 ticks (.34).  10yr up 8bps at 4.289.