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March Starts Sharply Weaker. Is it Iran?
March Starts Sharply Weaker. Is it Iran?
Spoiler alert: it's not Iran. And this morning's yields are the 2nd lowest in more than 3 months behind last Friday. Last Friday was also a month-end trading day with a mini snowball rally that defied overt explanation (apart from "month end bond buying")--a fact that led us to warn about the risk of "new month bond selling." It's not that bonds always rally at month-end or sell off when the new month begins, but if there's a sharp, inexplicable move on the last day of any given month, the risks of a reversal increase on the first day of the following month. Geopolitical headlines may cause modest volatility here and there, but bonds' correlation with oil prices is not a reliable analytical focus.
Mostly flat overnight with sharper selling starting at 7am. 10yr up 5.9bps at 4.009 and MBS down just over a quarter point.
a bit more weakness after ISM data. MBS down 10 ticks (.31) and 10yr up 8.8bps at 4.036
New lows with MBS down 3/8ths and 10yr up 10.3bps at 4.051
Bonds Cap Stellar Week With Range Breakout
| Time | Event | Period | Actual | Forecast | Prior |
|---|---|---|---|---|---|
| Monday, Mar 02 | |||||
| 9:45AM | Feb S&P Global Manuf. PMI | Feb | 51.6 | 51.2 | 52.4 |
| 10:00AM | Feb ISM Manufacturing Employment | Feb | 48.8 | 48.1 | |
| 10:00AM | Feb ISM Mfg Prices Paid | Feb | 70.5 | 59.5 | 59.0 |
| 10:00AM | Feb ISM Manufacturing PMI | Feb | 52.4 | 51.8 | 52.6 |
| Tuesday, Mar 03 | |||||
| 9:55AM | Fed Williams Speech | ||||
| 10:10AM | Mar IBD economic optimism | Mar | 50.1 | 48.8 | |
| 11:55AM | Fed Kashkari Speech | ||||
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