Bonds Turn Green After Econ Data and Treasury Auction

Bonds began the day in slightly weaker territory as yields continue to drift inside the narrow post-Fed range. The absence of big-ticket econ data is a key reason for the lack of volatility. But the lower-tier econ data can still move the needle as evidenced by this morning’s NY Fed Survey of Consumer Expectations. The survey showed a slight deterioration in attitudes about the labor market. Bonds moved into stronger territory after that and went on to hit the day’s best levels shortly after a well-received 3yr Treasury auction.

Econ Data / Events

ISM Biz Activity (Sep)

49.9 vs 51.8 f’cast, 55 prev

ISM N-Mfg PMI (Sep)

50.0 vs 51.7 f’cast, 52.0 prev

ISM Services Employment (Sep)

47.2 vs — f’cast, 46.5 prev

ISM Services New Orders (Sep)

50.4 vs — f’cast, 56.0 prev

ISM Services Prices (Sep)

69.4 vs — f’cast, 69.2 prev

Market Movement Recap

10:38 AM Modestly weaker overnight, but moving into positive territory now.  MBS up 1 tick (.03) and 10yr down 0.4bps at 4.142

11:56 AM Gains continue.  MBS up 3 ticks (.09) and 10yr down 2.7bps at 4.121

02:43 PM Temporary gains after strong 3yr auction, but back to pre-auction levels now.  MBS up 2 ticks (.06) and 10yr down 2.3bps at 4.125