Frustratingly Persistent Selling Pressure in Bonds

Bonds got off to a rocky start well before the domestic session began.  European bonds kicked off the selling spree, but most of the weakness arrived after the 8:30am release of the NY Fed Manufacturing data which swing wildly back into positive territory after being down big last month (+10.3 vs -18.0 f’cast, -24.6 prev). That said, the weakness was most noticeable while EU markets remained open.  After they closed, US bonds flat-lined with MBS down roughly half a point and 10yr yields pushing 3.60%. Strong bank earnings are also said to have contributed to the weakness. 

Econ Data / Events

NY Fed Manufacturing

10.8 vs -18.0 f’cast, -24.6 prevb

NAHB Builder Confidence

45 vs 44 f’cast, 44 prev

Market Movement Recap

10:36 AM Flat in Asia, weaker in Europe. More selling in US (strong earnings and NY Fed data).  10yr up 6.6bps at 3.581.  MBS down 3/8ths.

01:32 PM Moderate additional weakness heading into the 11am hour, but mostly a reflection of illiquidity.  10yr up 8bps at 3.595.  MBS still down 3/8ths.