Modest Gains After Mid-Day Volatility

With only a few exceptions, bonds have been a rudderless ship during the government shutdown. With the backlogged data returning in a slow and uncertain fashion, rudder repairs are similarly slow. In today’s case, bonds benefited from overnight strength in overseas bond markets and a bit of ongoing weakness in stocks. The surprise release of stale jobless claims data did nothing to inspire and there was limited benefit from another negative print in the weekly ADP numbers. As soon as EU bonds closed for the day, US bonds began selling off. The damage was short-lived and well contained. The net effect was another in-range day ahead of higher consequence events like Wednesday’s Fed minutes or Thursday’s jobs report. 

Econ Data / Events

ADP Weekly Payrolls 

-2.5k vs -11.25k prev

Jobless Claims (October 18th)

232k vs 223k f’cast, 219k prev

Factory Orders

1.4 vs 1.4 f’cast, -1.3 prev

Builder Confidence

38 vs 37 f’cast, 37 prev

Core Durable Goods (Aug)

0.4 vs 0.6 f’cast/prev

Market Movement Recap

09:56 AM Stronger overnight with some additional gains after ADP data.  MBS up 6 ticks (.19) and 10yr down 4.8 bps at 4.091

11:39 AM MBS up 3 ticks (.09) but down an eighth from AM highs.  10yr down 1.5bps at 4.125 but up 4bps from AM lows.

04:18 PM Off the weakest levels. MBS up an eighth and 10yr down 2bps at 4.119