Bonds were focused on this morning's ISM Services Index with some traders waiting to see more evidence of economic fallout from tariff-related uncertainty. Instead, the index moved slightly higher and was rather uneventful by the time all sub-components were considered. Not enough fuel there for bond bulls, so the bears kept the 3 day selling spree going, ultimately getting 10yr yields back over the 4.34 technical level that got so much play time in March.
stronger overnight, but modestly weaker in early trading. MBS down 2 ticks (.06) and 10yr up 1.3bps at 4.324
10:29 AM
Additional weakness after ISM data. 10yr up 3.7bps at 4.346. MBS down an eighth of a point.
11:12 AM
Bouncing back a bit. MBS down only 3 ticks (.09) and 10yr up 1.8bps at 4.329
01:39 PM
10yr up 5.5bps at 4.366 and MBS down nearly a quarter point.
03:17 PM
Nice little bounce off the weakest levels. MBS down 2 ticks (.06) and 10yr up 2.8bps at 4.338
Lock / Float Considerations
Bonds continued into weaker territory to start the new week and if data is any indication, it's not yet time to bank on a big data-driven rally. Conversely, there's enough potential fallout from tariff-related uncertainty to keep bond bears from getting too carried away. Near-term momentum is just as likely to be driven by Treasury auctions and Fed-speak as anything else. In the bigger picture, it's easier to make a case for a broadly sideways range as opposed to one that is trending convincingly in either direction.
