Best Closing Levels in More Than a Week, But Still Generally Flat
Wed, Oct 1 2025, 3:53 PM
MBS Recap
Best Closing Levels in More Than a Week, But Still Generally Flat
MBS Recap Matthew Graham | 3:52 PM
Best Closing Levels in More Than a Week, But Still Generally Flat
Short version: bonds have been basically flat ever since the 2-day sell-off 2 weeks ago that followed Fed Day and stronger econ data on Thursday the 18th.
Slightly longer version: Bonds were unchanged at the open after closing at higher levels yesterday. ADP came out much weaker than expected, prompting a rally that was immediate, but appropriately sized for ADP (i.e. nowhere near as big as it would have been for NFP). ISM Manufacturing was in line with expectations, which was good enough to end the bond rally for the day. Yields retraced half the ADP-inspired gains by noon, but rallied modestly in the PM hours to end the day at the lowest levels since last Tuesday.
Stronger after ADP data. MBS up 5 ticks (.16) and 10yr down 3.9bps at 4.109
10:16 AM
Minimal reaction to ISM data, but off the best levels. 10yr down 3.5bps at 4.113 (up from 4.09 lows). MBS still up 5 ticks (.16) but down 3 ticks (.09) from highs.
01:23 PM
Back near best levels in MBS, up a quarter point on the day. 10yr down 3.6bps at 4.113
Lock / Float Considerations
With the shutdown now confirmed, markets are not expecting to see Friday's jobs report this week. This makes for lower potential volatility heading into Friday, but it may result in ISM services hitting slightly harder than normal. Based on Wednesday's ADP reaction, it is already clear that markets are not simply replacing NFP trades with other data.
